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Turkey Insurance Report Q1 2011
Business Monitor International, Nov 2010, Pages: 76
The Turkey Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Turkey's insurance industry.
In late 2009, we suggested that, from the point of view of corporate planners at major multinational insurance companies, Turkey must be one of the most prospective national markets. This emphatically remains the case. In absolute terms, it is large. Premiums are growing steadily if not spectacularly. This is partly because of growth of usage in basic products such as Compulsory Motor Third Party Liability (CMTPL) insurance and partly because of the development of long-term savings from a low base. The financial system has shown itself to be sufficiently robust to withstand the pressures of the global financial crisis – and the subsequent economic slowdown in Turkey. The regulatory environment continues to improve – even if it still has some way before it is exactly comparable with that of the EU as a whole.
Best of all, there are very few barriers to entry. As is not the case in, say, Brazil, China or India (or South Africa, South Korea, Taiwan or Saudi Arabia, for that matter) there are no entrenched local players that are enormous organisations by any measure and/or which enjoy the benefits of state ownership. Anadolu Sigorta, Ak Sigorta, and Yapi Kredi Sigorta (respectively the affiliates of Is Bankasi, Sabanci group and Yapi Kredi/Koc group) are large non-life and life insurers by the standards of Turkey and other developing countries, but not by any other measure. Further – and in complete contrast to their counterparts in the Philippines, for instance, the large Turkish conglomerates are not necessarily committed to insurance over the long term. Already, for instance, Spain’s MAPFRE has emerged as the dominant partner of Genel – the affiliate of Cukurova, while press reports have speculated on the commitment to the sector of Yapi Kredi. As of late 2009, the local operations of French giant AXA was the largest insurer in the non-life segment (with a market share of over 12%), while Basak Groupama, an affiliate of the large French mutual group, was the second largest life insurer (with a market share of over 23%).
This means that the competitive landscape is likely to change further over the next five years or so. Already, a number of smaller operators have stopped writing new business. It is difficult to imagine that there will not be a wave of mergers and acquisitions. Nevertheless, the arrival through 2008 of Dubai Group – which had already captured 0.6% of the non-life market in the first seven months of 2009 – suggests that the foreigners will keep coming.
Compared to most other national insurance markets that are monitored by BMI – and, in particular, its peers in Central and Eastern Europe – the Turkish insurance sector did not suffer much from the global financial crisis. In absolute terms, premiums stalled, but did not contract. In real (or US dollar terms), they did shrink in 2009. Prices fell within the sector, but the number of contracts and customers continued to increase. In essence, the supply of capital and infrastructure to underwrite risks rose relative to demand: crucially, though, demand still grew.
Key Features Of This Report
Although this report is fundamentally similar to its predecessor in terms of structure, it contains a lot of new data. We have extended forecasts to 2015. We have also incorporated information made available by the trade association through to 2010.
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