TURKEY: Insurers' profitability may be maintained despite the current currency crisis

A stagflation scenario is a highly probable in Turkey and the non-life insurance market will be impacted. On the other side, due to inflation and higher interest rates, insurers will also see higher investment income, Yilmaz YILDIZ, CEO of Zurich Insurance Turkey told the World Finance quarterly.

YILDIZ explained that Turkey is going through a currency crisis, not a financial crisis or an economy-wide one, which means that "with the right measures to contain this currency crisis, it will not be too difficult for Turkey to get back to its growth trajectory very soon." In fact, he emphasized that one should not miss the strengths of the Turkish economy, which are all still in place: "What made Turkey a very attractive emerging market - most of those are still in place. Huge market of 80 million people? It's still there. Location? It is still there. A young, well-educated population, positive demographics? It is still there." The Turkish economy's diversification will also helpful.

Speaking on the currency crisis' impact on the insurance industry, YILDIZ said a slowdown in premium growth rates across all lines of business is to be expected, while the high inflation is leading to a substantial increase in claim costs. However, overall the profitability may not suffer as the investment income is expected to grow, given the strong inflationary trend (annual inflation rates of 25% at the end of 2018) and the increase of interest rates by the central bank. In short, while the core insurance business will inevitably suffer, because of higher costs of claims lower income from insurance operations, the overall profitability of the insurance undertakers may be maintained or even improved in some cases.

Regarding the 2018 results recorded by Zurich Insurance Turkey, he said that "they have been very good so far - even despite the volatility in the last two quarters," and company will meet or exceed its targets. "Because Turkey and Turkey's insurance market is still very attractive, and if you have the right strategy, the right team, and a good execution track record, there's no reason why you shouldn't be making your targets or exceeding your targets going forward." Yilmaz YILDIZ concluded: we're very confident about the future, and in the short-term; yes, sometimes different things happen - not only in Turkey, around the world. We take measures; we move on."

Follow XPRIMM Publications on LinkedIn, for more data on the insurance and financial industry.

Share |

Related articles


GENERALI Group results for year 2018

In 2018, GENERALI Group operating result reached EUR 4,857 million (+3.0%), with a net profit of EUR 2,309 mil. (+9.4%). The total gross written premiums (GWP) of the Group amounted EUR 66,691 mil. (+4.9%).


MetLife announced leadership changes as part of CEO transition

MetLife announced a series of changes to its senior leadership ranks in connection with its CEO transition, all of which are effective May 1, 2019. In January 2019, the BoD announced that Michel KHALAF, President, U.S. Business and EMEA, will become MetLife's President, CEO and Member of the Board effective May 1, replacing Steven KANDARIAN, who is retiring.


HANNOVER RE launches an insurtech innovation platform

Germany-based Hannover Re launched a platform designed to bring the insurance companies and insurtech innovators closer. Through the "hr | equarium" platform, Hannover Re wants to facilitate the connection between supply and the demand for insurtech solutions, taking advantage of its worldwide spread.



Conclusions: TBILISI - the first Georgian International Insurance Conference

Today takes place in Tbilisi the first Georgian International Insurance Conference, an event that will put under scrutiny the current status and the future development perspectives of the local market, in an attempt of identifying the main growth opportunities. The forthcoming launch of the mandatory MTPL system is the most important topic on the agenda, as this new line of business has the potential to provide for a significant growth, but also to become a market disruptor.


Motor insurance - becoming more financially efficient and consumer friendly

Under the strong pressure put by the technological evolution, the motor insurance business is rapidly changing, both in operational terms and, most visible, in the way insurers are interacting with their customers. Step by step, the insurers' relationship with customers evolves from simply indemnifying insureds for the losses suffered because of road incidents, to helping them prevent incidents and rapidly recover after the accidents that couldn't be avoided.


See all