Turkish Insurance Industry Overview
Insurance sector, which has existed in our country since the end of the 19th century, is crucial for the economy and stable growth, with its economic value more than forty times the Gross National Product itself.
Insurance in Türkiye was initiated in 1872 by the representative offices of British insurance companies. After the British insurers, the French insurers also showed interest in Türkiye and in 1878 the first French company launched its operations. Further, insurance activities expanded with the entrance of insurance companies of foreign countries such as German, Italian and Swiss to the market. Although these companies provided required quaranties to the insured, they were operating completely unsupervised at that time due to the absence of laws envisaging the establishment of insurance companies and regulating insurance activities, or even a provision addressing this issue.
In 1893, the first domestic insurance company was established with the title of Ottoman Public Insurance Company. With the changes made in the laws in 1908 and 1914, foreign companies were tried to be controlled. With the law of 1914, foreign companies were required to provide collateral and pay taxes.
“Anatolian Turkish Insurance Joint Stock Company” was established by İş Bank, on April 1st, 1925 (Özbolat, 2010: 39). Following this important development, “National Reinsurance Company (Milli Re)” was established in 1929, and a local reinsurance monopoly started. (Uyar, S.,and Uyar,2012). Since then, the Turkish Insurance sector has practiced many laws and regulations. Industry lived through a tariff period in which prices were fixed, which would last until 1990. The first Insurance Law No. 5684, which is still in effect, was published in the Official Gazette dated 14 June 2007 and entered into force.
Due to the fact that our country is an earthquake zone, with the number of vehicles in traffic increasing rapidly, especially in big cities, the risk of accident increased so much that individuals cannot carry them, insurance applications go beyond being a guarantee of assets, and with the development of products and services for the sustainability of commercial activities such as credit and performance insurance, attractiveness of pension funds for the economic stability, increased the state and people’s sensitivity to insurance. The reflections of the harmonization laws enacted years before in the process of integration with the European Union on risk management, insurance and social security issues have also gained great importance.
The Turkish insurance industry shrank significantly as a result of the economic crisis in 2008, but started to recover as of 2009 and entered a period of high-rate real growth with the reduction of the effects of the crisis. Direct premium production in the sector increased by 15% in real terms in 2013, about eleven points above the GDP. The increase in premium production in 2013 is the highest rate recorded in the last five years. However, the sector showed 7.3% nominal growth in life and non-life total in 2014, and could not achieve real growth for the first time in years (SEDDK, 2008 to 2014). As Table 1.1 demonstrates, between 2015 and 2021 premiums in US dollars could not grow, and share in the World Insurance Market decreased from 0.25% to 0.15%. With its very low share in GDP (around 1,3%) when compared to the World figure (around 7%), the Turkish insurance industry still keeps its potential to grow.
The increase in consumer expectations and the widespread use of technology in the insurance sector created a more conscious customer profile. Companies adopted approaches that focus on new customer acquisition, customer retention and customer value in order to achieve sustainable profitability that accelerated the delivery of fast, practical and creative solutions that are suitable for changing consumer expectations compatible with the digital world (Kurtulmuş, 2018).
Table 1.1 Turkish Insurance Industry – Direct Premium Figures in US$
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |
| Mio US$ | |||||||
| Non-life Premium | 9.800 | 11.400 | 10.200 | 9.000 | 9.244 | 8.765 | 8.645 |
| Life Premium | 1.400 | 1.600 | 1.900 | 1.400 | 1.689 | 2.039 | 1.881 |
| Total Premium | 11.100 | 13.100 | 12.100 | 10.500 | 10.933 | 10.804 | 10.526 |
| Non-life Share (%) | 88,29 | 87,02 | 84,30 | 85,71 | 84,55 | 81,13 | 82,13 |
| Life Share (%) | 12,61 | 12,21 | 15,70 | 13,33 | 15,15 | 18,87 | 17,87 |
| Premium /GDP(%) | 1,3 | 1,52 | 1,42 | 1,36 | 1,15 | 1,5 | 1,3 |
| Premium Per Capita (US$) | 141 | 164 | 149 | 128 | 131 | 128 | 124 |
| Share in World Insurance Premium (%) | 0,25 | 0,28 | 0,26 | 0,22 | 0,17 | 0,17 | 0,15 |
Source: SEDDK Annual Report About Insurance And Prıvate Pensıon Actıvıtıes (2015-2021). Retrieved from https://www.seddk.gov.tr/tr/raporlar, December 10, 2022.