Turkey Insurance Report 2013

Date: November 7, 2012
Pages: 104
US$ 1,175.00
Report type: Strategic Report
Delivery: E-mail Delivery (PDF), Download

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Key Insights And Key Risks

Virtually all the positive trends that we identified in Turkey’s insurance sector in the Annual Report last year remain intact. Inflation that is still high by the standards of most countries (if not Turkey) is boosting non-life premiums, but they are still almost achieving double-digit growth in real terms. This is thanks in part to the general improvement in the economy and the use of non-life insurance by first time customers. Non-life penetration remains in a steady uptrend. The life sector is developing quite rapidly from a low base, thanks in part to reforms which should boost the appeal of Turkey’s private pension products.

Nevertheless, there are challenges. In the life insurance sector, the relatively low coverage of traditional products and pension plans suggests that, for now, a large number of people are unaware of the benefits. Responding to volatile financial markets, many non-life and life insurers have kept (very) large portions of their investment portfolios in cash. Perhaps to a greater extent than their counterparts in other countries, in the non-life segment, the problem is more fundamental. Growth in premiums for many has been accompanied by profits for few. Not only has return on equity been falling over recent years for the non-life segment as a whole, it remained in negative territory in 2011.

We think that the lack of profitability – across many lines in the non-life segment – reflect the fragmented nature of the market. None of the leading local players would really rate as a large non-life company in most national markets that are surveyed by BMI. Some of the leaders have forged useful relationships with foreign groups that ensure that they have (easier) access to capital and world-class know-how: the alliance between the Sabanci group and Belgium’s Ageas, the strategic shareholders in Aksigorta is a case in point. However, none of the leading local non-life groups have really been able to leverage well developed brands and relationships with affiliated banks in such a way that they have control over prices/rates and profits. In the meantime, AXA has emerged as one of only two non-life groups with a double-digit market share in the non-life segment (the other being Isbank group’s Anadolu Sigorta).

Turkey, like several other large emerging markets, is clearly a country to which AXA is committed. We are not sure that this is true of the other foreign groups that are present in Turkey. Too many of the foreigners face the same problems as the larger/local groups, but with very small market shares. We expect that some kind of rationalisation will take place.

In the life segment, by contrast, it appears that bancassurance relationships have been crucial to business development. Although several foreign groups appear among the top ten players, it is the local groups that have established what looks to be a fairly unassailable position, albeit in a segment that is still underdeveloped by many measures. Anadolu Hayat Emeklilik (AHE) and Ziraat Hayat ve Emiklilik occupy leadership positions in spite of their apparent preparedness to cede market share through H112 in order to boost profitability.
Executive Summary
  Table: Total Premiums, 2010-2017
Key Insights And Key Risks
SWOT Analysis
Turkey Insurance Industry SWOT
Turkey Political SWOT
Turkey Economic SWOT
Turkey Business Environment SWOT
Life Sector Overview
Central And Eastern Europe Life Sector Overview
  Table: Central And Eastern European Life Premiums, 2010-2017 (US$mn)
Turkey Life Sector Update
Life Industry Forecast Scenario
  Table: Total Life Premiums 2010-2017
Growth Drivers And Risk Management Projections
  Table: Insurance Key Drivers, Demographics 2010-2017
Non-Life Sector Overview
Central And Eastern Europe Non-Life Sector Overview
  Table: Central And Eastern European Non-Life Premiums, 2010-2017 (US$mn)
Turkey Non-Life Sector Update
  Table: Turkey's non-life segment in the first four months of 2012
Non-Life Industry Forecast Scenario
  Table: Total Non-Life Premiums 2010-2017
Growth Drivers And Risk Management Projections
Macroeconomic Outlook
  Table: Turkey – Economic Activity
Political Stability Outlook
  Table: Europe Security Risk Ratings
  Table: Insurance Key Drivers, Disease Adjusted Life Years, 2010-2017
Islamic Finance
Insurance Risk/Reward Ratings
  Table: Turkey’s Insurance Risk/Reward Ratings
  Table: Central And Eastern Europe Insurance Risk/Reward Ratings
Competitive Landscape
Competitive Landscape Analysis
Major Players In Turkey’s Insurance Sector
  Table: Non-Life Ranking Table – First Four Months of 2012
Non-Life Ranking Table – First Four Months of 2012
Company Profiles
Anadolu Hayat Emeklilik (AHE)
Anadolu Sigorta
BNP Paribas Cardif
Talanx AG
Vienna Insurance Group
Ziraat Hayat ve Emeklilik (ZHE)
Zurich Insurance Group
Demographic Outlook
  Table: Turkey's Population By Age Group, 1990-2020 ('000)
  Table: Turkey's Population By Age Group, 1990-2020 (% of population)
  Table: Turkey's Key Population Ratios, 1990-2020
  Table: Turkey's Rural And Urban Population, 1990-2020
BMI Methodology
Insurance Risk/Reward Ratings
  Table: Insurance Risk/Reward Indicators And Rationale
  Table: Weighting Of Indicators
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