Turkish insurers held back by underwriting losses and economic volatility: AM Best

Sentiment on the Turkish insurance market has become less optimistic in recent times, as it has generated poor underwriting performance for most market participants.

That’s the view of AM Best, a credit ratings agency that specialises in the insurance industry.

Turkey has historically provided great opportunities for investors, offering high economic growth potential and a unique “east meets west” position, said AM Best. This has prompted most foreign insurance groups to set up or acquire operations in Turkey to take advantage of the huge economic potential.

AM Best added: “However, more recently, with elevated geopolitical tensions, currency devaluation, high inflation, changing financial regulation and an insurance market that has consistently generated poor underwriting performance for most market participants, sentiment is less optimistic."

Many global insurers now think twice about investing in Turkey, with those present considering their options, said AM Best.

The agency notes that as a result of Turkish insurers potentially significant exposure to catastrophe risk from earthquake events, many domestic insurers have limited net exposure to large property and engineering business as a result of ceding the bulk of commercial risk to reinsurers and the majority of individual property risks being absorbed by the Turkish Catastrophe Insurance Pool (TCIP).

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