Page 24 - Turkinsurance Digital Magazine

24 at a glance

2021 will be the year of damage repair in the insurance industry

KPMG Turkey re- outlook for Turkey will be stronger than 2020, despite the decel-
searched the 2020 out- eration, remains valid. Economic activity, which contracted in
look and 2021 expec- 2020 but is expected to begin a revival in 2021, also signals that
tations in the insurance it will support premium volumes and revenues.”
industry. According Some of the highlights from the ’Looking at the Insurance Sec-
to the report entitled tor from the Perspective of KPMG’ report are as follows:
‘KPMG Turkey Perspec-
tive on Insurance Sec- Due to the global epidemic, the technological breakthrough pro-
tor’, the pandemic-hit cess of the sector has become a necessity. Companies are strug-
sector is expected to gling with the shake-up of an unprecedented year, while on the
make a strong comeback one hand, they are trying to keep up with increased competi-
in 2021. 2021’ will be tion and changing customer preferences.
the ‘year of repair’ in the
industry. The transfer of processes to the online world and the transfer
of competitiveness to insureds also puts pressure on pricing.
KPMG Turkey’s report Both the succession effects of the epidemic process increased
evaluates the perfor- investment expenditures, and changes in the competitive axis
mance of the insurance can lead to a fluctuation in the profitability outlook of the
sector in 2020 and ana- sector in the coming periods.
lyzes the expectations of 2021. According to the report, the sec-
tor, which is shrinking globally due to the epidemic in 2020 and There are strong signals in Turkey
has made the highest damage payments in recent years in the
world due to social events, is expected to have a strong come- • The insurance sector in Turkey managed to move its total
back in 2021. Non-life branches feed the insurance sector, which assets above the 300 billion TL limit in 2020. In the sector,
exceeds the 300 billion TL limit in Turkey. Evaluating the re- which has grown by more than 30 percent for two consecu-
port, KPMG Turkey Insurance Sector Leader Ali Tugrul Uzun tive years, the channel, life, and retirement branch have again
stated that policy production in sectors such as global services, grown above this average in the last two years. During this
manufacturing, and logistics, which were deeply damaged by the period, elemental (non-life) companies grew by 24 percent,
pandemic in 2020, and said that 2021 will be a year in which life and pension companies by 33 percent, and reinsurance
‘damage will be repaired’. Uzun added that “2020 has been a companies by 39 percent.
costly year in terms of natural disasters, as well as heavy damage • The sector increased gross premium production by 19 per-
caused directly by the outbreak, such as major organization can- cent in 2020 from the previous year. Total volume reached
cellations. Considering social events such as mass street demon- 82.6 billion TL. 83 percent of this volume (68.1 billion TL)
strations, natural disasters, and events such as the explosion of came from non-life branches.
Beirut Port, 2020 was the year in which the highest damage • As of February 2021, 86 percent of the premium total in
payment was made in recent years. Considering that 2021 start- the value of 16.7 billion TL is derived from non-life branches.
ed with the ongoing epidemic and events such as the Suez Canal • Although expansion continues in the automotive market,
accident in March, it can be said that it is not an easy start. The which accounts for close to half of the sector’s premium rev-
global outlook will generally be determined by the course of the enues, epidemic measures retain the potential to restrict pre-
epidemic and the vaccination process. In the medium-term out- mium production. Restrictions, which are expected to ease in
look, the role of developing countries will be effective. Scenarios parallel with the progress of the vaccination process and the
in which the share of developing countries in the global premi- decrease in the number of cases, are the most important vari-
um pie grows rapidly are still baseline. China’s re-entry into the able in this view.
growth trend through the epidemic also supports this scenario. • Expectations are that the sector will spend this year stronger
The industry, which contracted in 2020, is expected to make a than 2020, despite the deceleration. Economic activity, which
strong comeback in 2021. For this reason, the sector’s 2021 contracted in 2020 but is expected to begin a revival in 2021,
expectations are quite strong”. also signals that it will support premium volumes and revenues.
• The sector’s problems with consumer behavior continue. The
Uzun added that the insurance sector, with its asset size exceed- sector is performing below its potential, mainly due to the lack
ing the limit of 300 billion TL at the end of 2020 in Turkey, of income that can be allocated to it. Despite the rapid increase
maintains a high growth potential in line with economic growth in the size of the sector’s assets and the adoption of supportive
expectations. Uzun said “The scenario that the macroeconomic steps, there is still a long way to go.