Page 19 - Turkinsurance Digital Magazine

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The robust capital structure of the insurance sector is of critical Will 2025 be a difficult year, as some insurers have
importance for ensuring the sustainability of insurance activities in said?
the face of potential catastrophic outcomes of the anticipated Mar-
mara earthquake and possible adversities in the economic climate. The dynamics of both the domestic and foreign markets in 2025, in-
From this perspective, the 83% growth in equity compared to the cluding currency exchange rates, the war in neighboring countries,
same period last year is considered a positive development. In this and economic issues, are clearly interconnected. Factors that will
context, it is essential to create policies aimed at strengthening the affect Turkish economic dynamics in 2025, such as a potential
capital structure of companies and ensuring the sustainability of ceasefire in the Russia-Ukraine war, the reconstruction of Syria,
equity growth. Additionally, the regulatory authority continues to and Saudi Arabia’s investment mobilizations, are also closely re-
work on relevant legislation in this area. lated to the insurance sector.

However, in 2024, although we worked towards expanding the sec- If the current economic policy continues, gradual interest rate cuts
tor, increasing insurance penetration from 2.5 to 5, and shaping could reduce financial revenues and potentially lead to decreased
the next five years of the insurance industry, we did not make sig- competition in non-traffic insurance sectors. In the cash cycle,
nificant progress. There’s an elephant in the room that limits our traffic insurance plays a significant role, and it is expected that
space for movement – it’s the problems of the past, like regulations, new vehicle sales and measures to reduce uninsured driving will
traffic insurance, and the guarantee fund. A significant portion of positively affect the premium production of this branch.
our time has been consumed by these issues. Unfortunately, due to
the focus on these regulations and problems, we haven’t been able
to discuss the future as much as we should. The robust capital structure of the insurance
sector is of critical importance for ensuring the
What are your expectations for the Turkish insurance sustainability of insurance activities in the face
sector in 2025?
of potential catastrophic outcomes of the antic-
The growth goals of the Turkish insurance sector in 2025 include in- ipated Marmara earthquake and possible adver-
creasing collaborations both nationally and internationally, as well sities in the economic climate.
as raising the sector’s insurance penetration rates. Key objectives
include increasing penetration in mandatory branches like earth- While insurance in Turkey each year faces new challenges with-
quake insurance, raising insurance rates in areas such as motor, in its own dynamics, it has been able to achieve real growth de-
fire, and private health insurance, expanding complementary health spite the difficult past 3-4 years. In 2025, despite challenges, real
insurance, and developing financial insurance products. growth opportunities are expected to arise through TES (Turkey’s
insurance ecosystem), the development of compulsory insurances,
In terms of international expansion, the Turkish insurance sector health insurance, compulsory earthquake tariffs, and digitaliza-
aims to increase cooperation with Turkish-speaking countries. This tion.Of course, if I had one wish for 2025, it would be to focus
collaboration seeks to promote the exchange of know-how, share more on the future than the past; to develop the insurance indus-
national risks on a global level, and strengthen the sector inter- try, increase penetration, and transfer more customers’ risks to
nationally. Digital transformation is viewed as a critical priority the insurance sector.
for gaining a competitive advantage. In terms of marketing strate-
gies, the aim is to organize educational and awareness campaigns Unfortunately, we cannot stop talking about the motor branch,
to increase insurance awareness. There are plans to include content particularly traffic insurance, because 40% of our sector’s annu-
related to insurance awareness in educational curricula, which has al production comes from traffic and comprehensive insurance.
been discussed for many years. This will ensure that the importance Therefore, in 2025, one of the main areas of focus for the Turk-
of insurance is understood from a young age, ultimately increasing ish Insurance Association (TSB) will be the costs in traffic insur-
insurance penetration rates in the long term. ance, and we have repeatedly emphasized that these costs need
to be reduced. The cost elements in traffic insurance are quite
As a result, for 2025, the Turkish insurance sector plans to achieve clear. Our primary task is to ensure that compensation amounts,
its growth targets through innovative products, digitalization, and especially for bodily injuries—i.e., disability, injury, or fatalities
customer-focused approaches. Educational and awareness strate- resulting from a traffic accident—are paid according to pre-estab-
gies to increase insurance awareness are seen as a key factor in lished principles, without resorting to lengthy court processes. We
strengthening customer loyalty. In addition, with international ex- have actually agreed on a method to pay the victim or the party
pansion goals, the sector is expected to increase its global compet- affected in a very short time. We are currently working on these
itiveness. On the other hand, in an environment where inflation issues. Secondly, there is a coverage for depreciation; we pay the
and interest rates are expected to decrease, the release of financial damage, but there is no coverage or premium for it. We want to
statements for the first quarter of the year signals a softer com- regulate this by putting it under control. Of course, when deprecia-
petitive environment and a period where more stable, technical tion occurs, arbitration comes into play. The costs increase dramat-
profitability will come to the forefront. The most important aspect ically in arbitration, becoming a significant cost item. Thirdly, en-
of the Turkish insurance sector in 2025 is expected to be higher suring the use of original or equivalent parts is another crucial step.
capital adequacy, a more consolidated market, and higher average We have made substantial progress on these three aspects. Once
premiums with increased technical premium production as a result we have accomplished these, our next move will be to transition to
of consolidation. a free tariff system in traffic insurance, creating an environment
where both income and costs can be determined freely. We hope to
Overall, we anticipate that our sector will experience double-digit see these developments in 2025.
growth in 2025, with real growth exceeding inflation.