Turkey’s insurance industry has $150bn potential – Zurich Turkey CEO
Currently valued at $30bn, the sector would quintuple in size if it reached EU average penetration
Yılmaz Yıldız, CEO of Zurich Turkey, breaks down the country’s $30bn insurance industry. Turkey has quite low insurance penetration compared with EU nations, so its potential is huge – which is why it’s been attracting so much investment from Europe, Asia, and the US, and grown roughly 10-15 percent per annum over the last decade. He also explains how the number of young people in Turkey is putting the industry ahead of the digital transformation curve. If you’re starting here, you should go back to find out how global economic trends will be affecting Turkey’s overall economy – and hence the P&C insurance segment. And watch the rest of our conversation with Yılmaz Yıldız, on insuring against cyber-risks.
World Finance: Let’s move on to Turkey’s insurance industry. Currently worth $30bn; how does that break down?
Yılmaz Yıldız: Yes, it’s a $30bn market that has grown roughly 10-15 percent per annum in the last decade. And it has three segments: life, pensions, and non-life – property and casualty.
The life part is mostly credit life, and it’s relatively small, about $1.5bn. Private pension part is the big part: more than six million citizens are in, and the funds under management is around $17bn now, and it’s growing around 30-35 percent per annum.
The third big segment is the non-life property and casualty. Again, very high growth rates; but that part is very much related to what happens on the economy, investments, exports, imports. So as the economy grows, the P&C part is very much sensitive to that. And when the growth slows down – again, it is impacted.
World Finance: So where in that breakdown is Zurich operating, and what’s been your strategy so far?
Yılmaz Yıldız: Zurich is mainly a non-life property and casualty player in Turkey; entered Turkey in 2008 through an acquisition, and since then we have invested over $500m to the Turkish non-life property and casualty market.
Our focus is on personal lines and SMEs. Those two make up roughly 80 percent of our base.
We’re one of the leaders in bancassurance and also on the commercial corporate side; and one of the most profitable as well.
World Finance: Turkey has quite low insurance penetration compared with EU nations, for example. How much more potential is there?
Yılmaz Yıldız: If you take Turkey’s average – one, 1.5 percent of GDP – in terms of premiums. If you look at EU averages, it could increase five-fold. It’s huge. So we’re talking about from $30bn to $150bn. That’s just to reach the average. And that’s one of the reasons why there’s been so much investment in the Turkish insurance sector from Europe, Asia, and the US.
World Finance: Let’s skip back to the number of young people in Turkey. Is that putting you ahead of the curve on the digital transformation journey?
Yılmaz Yıldız: Absolutely. There are 45 million internet banking users, 20 million mobile banking users, three million SMEs conducting their business online. So it’s a huge market: the physical and the digital – you cannot separate it anymore, it is one.
So you have to kind of reinvent how your company operates. We have to make it work seamlessly and completely integrated. That requires omni-channel approach, in terms of how you sell your products. It requires omni-channel customer services.
So it’s a big opportunity. It’s happening everywhere. The speed may be faster or slower, depending on what your customers and distribution channel demands. We talk about Turkey – the demand is there! So we have to move very fast, and that’s exactly what we’re doing.