Main Challenges and Opportunities
The year 2023 started with challenges for the insurance industry. The following are some highlights:
- The premiums rising due to high inflation and technical losses in the motor branch taken over from the previous years caused some customers with a low loss ratio to exit the insurance system.
- It is estimated that a sectoral loss of approximately 5 billion USD total cost of insurance and reinsurance companies) occurred in the SouthEast region of Turkey on 06 February 2023 due to the devastating earthquake damage that affected 11 cities, excluding the losses in the motor branch. (Aon, 2023)
- Due to the high MTPL loss/premium ratios, insurance companies are reluctant to issue policies despite many new regulations of the regulatory and supervisory authority (SEDDK), and there is no insurance company keen to issue TPML policies, which is a compulsory product.
- In addition, the earthquake that occurred on February 06, 2023 increased the concerns for the insurance sector players (specially reinsurers) about the consequences of the upcoming great Marmara Earthquake.
- There will be a shrinkage in both life and non-life premium production in the bancassurance channel due to bank loans falling and coming to a halt due to rising interest rates and contraction-oriented inflation reduction policies.