The number of insured vehicle drivers in Türkiye is expected to decrease as motor insurance premiums increase, according to the "2023 Sector Report" released last week by the Insurance Association of Türkiye (TSB).
In the section of the report commenting on insurance industry expectations, TSB said that while it is expected that the motor branch’s premium production will continue to rise due to cost increases, the number of insured will decrease.
While a ceiling is applied to tariffs in compulsory traffic insurance, which is the engine of the insurance sector, the loss-premium imbalance in the branch has been persistent for many years. Although the tariff increases made in 2023 brought some improvement, the insurance sector's expectation of a transition to a liberalised motor insurance pricing system and the parallel expectation of a narrowing of the risky insured pool are expected developments.
Electric vehicles
On the other hand, the assessment is that there may be an increase in the number of insured in the compulsory traffic insurance branch if electric mini-vehicles and vehicles with engine capacity of under 50cc — classified as electric bicycles — are included in the scope of compulsory traffic insurance.
Due to a predicted increase in electric vehicle sales next year, the insurance coverage to be given to these vehicles and the issues related to compensation for damages caused by battery units in particular will be on TSB’s agenda. The use of autonomous vehicles, losses and threats such as cyber attacks, are also expected to be discussed more.
In addition, there are expectations in the insurance sector about the introduction of a direct compensation system and personalised motor insurance, developments which have been long awaited.
It is also observed that due to the high increase in vehicle prices in casco insurance in 2023, casco policy premiums increased, and thus the damage/premium ratio results of casco products were balanced.
It is expected that vehicle loans will contract in 2024 and that there might be lower sales of motor insurance. This is because of the increase in credit interest rates in Türkiye, lower credit usage, the increase in deposit interest rates, and the decrease in vehicle sales and housing sales are important factors affecting retail insurance in 2024.