Türkiye’s Insurance Sector Is Positively Differentiating Itself and Demonstrating a More Resilient Risk Profile
Türkiye’s insurance sector has undergone a significant regulatory transformation over the past few years.
In particular, regulations introduced by SEDDK in areas such as capital adequacy, balance-sheet quality, risk management and supervision have been reshaping both the financial structure of the sector and the way it operates. 2026 has been an especially busy year in this respect. As I have occasionally put it, regulation was running, and the industry was trying to keep up.
So, how does all this transformation look from the outside?
When S&P Global Ratings visited Türkiye, I wanted to look at the changes taking place in the Turkish insurance sector, developments in the regulatory framework, the sector’s financial resilience and the risks that still lie ahead through the eyes of an international credit rating agency.
With this in mind, I conducted an in-depth interview with Sachin Sahni of S&P Global Ratings.
The timing added an interesting dimension to the interview. Around the time the final responses arrived, S&P published its new Türkiye Property/Casualty Insurance Industry and Country Risk Assessment — P&C IICRA — and revised Türkiye’s P&C IICRA assessment from High to Moderately High.
The result was a particularly noteworthy picture:
Country Risk: High
Industry Risk: Moderately Low
P&C IICRA: Moderately High
Source: S&P Global Ratings, as of September 25, 2026
S&P also notes that the High Country Risk assessment overstates the risks faced by Türkiye’s P&C insurance sector.
Put simply: Türkiye’s insurance sector is positively differentiating itself and demonstrating a more resilient risk profile. Stronger profitability, improvements in product risk management, increased resilience to catastrophe events, and developments in the supervisory and operating framework are among the key factors supporting this change.
However, this does not mean that the challenges are behind us. Alongside strong profitability and increasing financial resilience, S&P’s assessment highlights technical profitability — particularly the results in compulsory motor third-party liability insurance — catastrophe risks, reinsurance capacity and macroeconomic volatility as issues that remain important for the sector.
Key highlights from the interview were first featured by Dünya Gazetesi.
The full Q&A of my interview with S&P Global Ratings is available below.
Enjoy the read.
Interview by: Zeynep TürkerS&P Global Ratings: Sachin Sahni
Sachin Sahni
Associate DirectorFinancial Services – Insurance Ratings
Sachin Sahni is a part of S&P Global Ratings since 2015, based in DIFC - Dubai office, covering Insurance Ratings spread across MENA, Turkiye & South Africa. As a credit analyst, he manages a large portfolio of insurers and is responsible for assigning and conducting ongoing surveillance of their Credit Ratings. Mr. Sahni is also actively involved in market research and has published various insurance industry report cards & articles on industry current affairs. He is a qualified Chartered Accountant & MBA (Finance) and has 25 years of experience in Financial Services (Banking & Insurance) encompassing Credit Ratings, Governance, Risk & Compliance, Internal Controls & Statutory Audit.
ENGLISH – ORIGINAL
Section 1: Structural Transformation
Over the past three years, the Turkish insurance sector has undergone a quiet but remarkable transformation. According to figures shared by the President of SEDDK at the latest General Assembly of the Insurance Association of Türkiye (TSB), the number of financially vulnerable insurers declined from 16 to one, and later to zero. During the same period, the sector's return on equity reached approximately 47%. What makes this transformation particularly notable is that it was achieved without direct public capital support and under challenging conditions marked by high inflation and significant earthquake exposure.
Key Questions
• How do you assess this transformation from S&P's perspective?
• How is this transformation reflected in the perception of international investors and reinsurance markets in terms of capital quality, financial resilience and regulatory credibility?
S&P’s Response
Over the past five years, Türkiye's insurance sector has operated in a highly challenging environment characterized by elevated inflation, significant currency volatility, and major catastrophe exposure, including the February 2023 earthquakes. Despite these pressures, the sector has generally demonstrated resilience. Premium growth has remained strong, broadly keeping pace with inflationary trends, while profitability has improved materially in recent years.
The strengthening of sector performance has occurred during a period that has also seen a series of regulatory and supervisory reforms, including higher capitalization requirements, enhanced solvency oversight, and increased supervisory scrutiny. While these developments have contributed to a more demanding operating environment for insurers, their effectiveness will continue to be assessed through different economic and underwriting cycles.
The reduction in the number of financially challenged insurers may indicate improvements in overall sector discipline and financial strength. However, it is important to recognize that Türkiye's insurance market continues to operate within a complex environment shaped by inflation, catastrophe exposure, and evolving regulatory requirements. Sustaining recent improvements will depend on insurers' ability to maintain profitability, adequate capitalization, and effective risk management through varying market conditions.
From the perspective of international investors and reinsurers, greater clarity around solvency requirements, supervisory expectations, and market oversight can help reduce uncertainty. However, external stakeholders continue to focus not only on regulatory developments but also on the sector's ability to demonstrate durable profitability, capital resilience, and financial flexibility over time. While progress has been evident, the transition toward a fully risk-based supervisory framework aligned with international standards remains ongoing.
2. SUPERVISORY DEPTH, FINANCIAL RESILIENCE AND BALANCE SHEET QUALITY
ENGLISH – ORIGINAL
In recent years, SEDDK's focus has expanded beyond capital adequacy to include investment behavior, balance sheet quality, intra-group transactions and asset composition. This reflects a broader shift toward evaluating resilience not only through the amount of capital held, but also through the quality of capital and the strength of the balance sheet.
Key Questions
• How do you view this supervisory approach in the context of international regulatory trends?
• Do you expect regulators to place greater emphasis on investment portfolio quality, liquidity management and balance sheet composition in the years ahead?
• Where does Türkiye stand in this transition?
S&P’s Response
Türkiye's insurance supervisory framework has continued to evolve toward a more risk-sensitive approach, with increasing attention given to balance-sheet quality, governance, liquidity, and risk management alongside traditional solvency measures. In our view, this reflects a broader recognition that capital adequacy alone may not fully capture an insurer's risk profile, particularly in volatile operating environments.
This direction is broadly consistent with international regulatory developments. Across many jurisdictions, supervisors have increased their focus on investment quality, concentration risk, liquidity management, asset-liability matching, and enterprise risk management. Frameworks such as Solvency II and the IAIS Insurance Core Principles emphasize the importance of understanding the underlying risks within insurers' balance sheets rather than relying solely on quantitative capital ratios.
Recent reforms in Türkiye appear aimed at strengthening governance, internal controls, and risk management practices across the sector. The extent to which these initiatives translate into stronger balance-sheet resilience will depend on implementation and on insurers' ability to incorporate these requirements into operating and decision-making processes.
Türkiye has introduced a number of elements commonly associated with more risk-based supervisory frameworks, although important differences remain compared with fully developed Solvency II regimes. In our view, recent developments suggest an increasing emphasis on risk identification, governance, transparency, and balance-sheet sustainability.
This evolution is particularly relevant given Türkiye's operating environment, where inflation, market volatility, and catastrophe risk can amplify balance-sheet pressures. Under such conditions, effective governance, prudent investment management, liquidity management, and robust risk controls become increasingly important determinants of financial resilience.
3. IFRS 17, TRANSPARENCY AND FINANCIAL REPORTING
ENGLISH – ORIGINAL
IFRS 17 is widely regarded as the most significant accounting transformation the insurance industry has experienced.
As the Turkish insurance sector adopted the standard alongside global markets, SEDDK supported the transition through implementation guidance, timelines and industry preparation efforts. In addition, certification and competency-building initiatives were introduced to strengthen IFRS 17 expertise across the sector.
Key Questions
• How would you assess the Turkish insurance sector's level of adaptation to IFRS 17?
• Do you believe IFRS 17 will change the way investors, reinsurers and international markets assess the Turkish insurance sector?
• Beyond compliance, do you expect IFRS 17 to influence underwriting discipline, reserving culture and management decision-making in a meaningful way?
S&P’s Response
In December 2025, SEDDK postponed the implementation of TFRS 17, Türkiye's equivalent of IFRS 17, to 1 January 2027, providing insurers with additional preparation time. As many insurance markets adopted IFRS 17 in 2023, Türkiye's implementation schedule now lags that of numerous international peers, including many markets across Central and Eastern Europe, the GCC, and parts of the CIS that implemented IFRS 17 as part of the global 2023 adoption timetable. The transition remains a complex undertaking, particularly given the operational demands associated with actuarial modelling, data management, systems development, and financial reporting.
Adaptation has generally progressed more rapidly among larger insurers, particularly those with access to international expertise and established actuarial resources. Smaller and mid-sized companies may face greater implementation challenges due to resource constraints, talent availability, and technology investment requirements.
From an investor perspective, IFRS 17 has the potential to improve comparability and transparency across insurance markets. By providing a more consistent framework for measuring insurance liabilities and recognizing earnings, the standard may allow stakeholders to assess underwriting performance and profitability on a more comparable basis across jurisdictions. The framework has the potential to enhance confidence in reported reserve adequacy and earnings quality through greater disclosure and more standardized measurement approaches. Improved visibility into liability valuation methodologies and future earnings emergence could support more informed assessments of insurers' financial profiles.
Beyond reporting requirements, IFRS 17 has the potential to influence management behavior. Greater transparency regarding product profitability, pricing adequacy, and future earnings generation may encourage stronger underwriting discipline and a more analytical approach to reserving and portfolio management. The extent of these benefits, however, will vary among insurers and depend largely on the quality of implementation.
4. TECHNICAL PROFITABILITY, PRICE COMPETITION AND MARKET DISCIPLINE
ENGLISH – ORIGINAL
Motor insurance remains one of the most debated lines of business not only in Türkiye but across the global insurance industry.
The balance between price competition, growth and technical profitability has been a longstanding issue in Türkiye as well. Recent measures introduced by SEDDK regarding capital adequacy, excessive underwriting and concentration risk have attracted attention.
Key Questions
• How do you assess this approach from the perspective of technical sustainability and market discipline?
• Do you see the Turkish insurance market evolving from a premium growth-focused model toward one that places greater emphasis on technical profitability and capital efficiency?
• When you look at global insurance markets, what typically happens when growth consistently outpaces technical profitability, and what lessons might be relevant for Türkiye?
S&P’s Response
The Turkish insurance sector has experienced exceptionally strong premium growth in recent years, reflecting both inflationary conditions and rising insurance demand. However, technical profitability remains an important area of focus. Aggregate underwriting performance has remained under pressure, particularly within motor third-party liability insurance, where profitability challenges have persisted for several years.
From our perspective, sustainable sector development ultimately depends on balancing growth objectives with underwriting profitability and capital preservation. While insurers may accept lower profitability in certain business lines for broader commercial or strategic reasons, prolonged underwriting losses can place pressure on earnings quality, capital adequacy, and financial flexibility.
Recent supervisory measures aimed at monitoring premium growth, concentration risk, and capital adequacy appear designed to more closely align underwriting activity with insurers' financial resources. Their effectiveness will ultimately depend on insurers' underwriting discipline, pricing practices, and ability to generate sustainable risk-adjusted returns.
The Turkish market also differs from many fully liberalized insurance markets due to the presence of regulatory intervention in certain business segments, particularly motor third-party liability insurance. Such arrangements may support broader public-policy objectives but can also influence the relationship between pricing, risk, and profitability.
More broadly, market developments suggest increasing attention to technical profitability, capital efficiency, and return sustainability. This is consistent with trends observed internationally, where investors, regulators, and rating agencies increasingly focus on the quality and durability of earnings rather than premium growth alone.
International experience suggests that when premium growth consistently outpaces profitability, underwriting margins can deteriorate, reserving risks may emerge, and capital resources can come under pressure. As a result, long-term sector resilience generally depends on disciplined underwriting, risk-based pricing, strong reserving practices, and effective capital management.
5. EARTHQUAKE RISK, CAPACITY MANAGEMENT AND RESILIENCE
ENGLISH – ORIGINAL
Following the February 6 earthquakes, claims-paying capacity, reinsurance protection structures and capital buffers have come under much closer scrutiny.
SEDDK's earthquake stress tests and capacity adequacy assessments have been important elements of this process.
Key Questions
• How would you assess the resilience of the Turkish insurance sector against earthquake risk?
• How do you view Türkiye's catastrophe financing capacity and reinsurance protection structure from an international perspective?
• What are the most important factors that determine whether a catastrophe-prone market can remain both insurable and financially resilient over the long term?
S&P’s Response
The February 2023 Kahramanmaraş earthquakes represented a significant test of Türkiye's catastrophe-risk financing arrangements and claims-paying capacity. Despite the scale of the event, the insurance sector remained operationally functional and generally financially stable, supported by reinsurance protection, catastrophe risk-transfer mechanisms, and capital resources across much of the industry.
An important element of Türkiye's catastrophe-risk framework is TCIP, which provides a structured mechanism for earthquake risk pooling and transfer. Following the earthquake, TCIP handled a substantial volume of claims, providing evidence of its capacity to process and settle claims after a major catastrophe event. At the same time, the event highlighted the existence of protection gaps, with uninsured losses remaining significant.
Compared with many emerging insurance markets, Türkiye has developed a relatively extensive catastrophe risk-transfer framework. The use of large-scale international reinsurance support enables a meaningful portion of catastrophe risk to be transferred beyond the domestic insurance sector, helping to diversify risk and reduce concentration within the local market.
The increasing use of stress testing, catastrophe modelling, and capacity assessments is broadly consistent with international supervisory practices. These tools can assist insurers and supervisors in understanding vulnerabilities and assessing resilience under severe but plausible catastrophe scenarios.
In our view, the long-term insurability of catastrophe-exposed markets typically depends on broad insurance penetration, sustainable access to reinsurance capacity, adequate capitalization, risk-based pricing, and effective catastrophe modelling. These factors are interconnected and collectively influence a market's ability to absorb future shocks while continuing to provide affordable protection.
6. DIGITAL INSURANCE, DISTRIBUTION CHANNELS AND ARTIFICIAL INTELLIGENCE
ENGLISH – ORIGINAL
Artificial intelligence, advanced analytics and digital distribution models are reshaping the insurance industry.
Türkiye stands out in this transformation through its centralized insurance data infrastructure. Through SBM, EGM and e-Government integration, Türkiye has developed a level of data centralization that remains relatively uncommon in many insurance markets.
Key Questions
• How do you assess Türkiye's progress in digital insurance and data management?
• What do you see as the most important responsibilities of regulators in areas such as AI, data governance and cyber resilience?
• As artificial intelligence becomes more deeply embedded in underwriting and claims processes, what risks concern you most from a regulatory and governance perspective?
S&P’s Response
At this stage, we do not have sufficient analytical coverage or published views relating specifically to digital insurance, artificial intelligence, data governance, and digital distribution developments in the Turkish insurance sector to provide a meaningful assessment. Consequently, we prefer not to comment on this topic.
7. GEOPOLITICAL RISKS AND EMERGING SYSTEMIC RISKS
ENGLISH – ORIGINAL
Regional conflicts, energy security concerns, trade corridors and geoeconomic fragmentation are reshaping the risk landscape of the insurance industry. Türkiye occupies a unique position as a country with both significant catastrophe exposure and strategic regional importance.
Key Questions
• How do you think geopolitical developments are changing risk perceptions in global insurance and reinsurance markets?
• How do you see Türkiye's position within this evolving risk environment?
• Do you expect geopolitical risk to become a more important factor in pricing, capacity allocation and capital deployment decisions across the insurance sector?
S&P’s Response
Geopolitical risk has become an increasingly important consideration for insurers and reinsurers globally, influencing underwriting, investment, and capital allocation decisions. In recent years, risk assessments have broadened beyond traditional actuarial and catastrophe considerations to include factors such as geopolitical tensions, sanctions risk, cyber threats, supply-chain disruptions, energy security concerns, and trade route vulnerabilities. These developments can affect both the frequency and severity of losses across a range of business lines, including marine, aviation, trade credit, political risk, and cyber insurance.
From a reinsurance perspective, geopolitical developments are also influencing risk appetite and capacity deployment. Reinsurers are increasingly focused on the potential accumulation of losses arising from interconnected risks, including conflict-related disruptions, cyber incidents, infrastructure failures, and economic fragmentation. As a result, underwriting decisions in many markets are increasingly informed by assessments of political, economic, legal, and operational risks alongside more traditional insurance metrics.
Türkiye occupies a distinctive position within this evolving environment. Its location at the intersection of Europe, Asia, and the Middle East, together with its importance as a regional trade and transportation hub, gives it strategic relevance from a commercial perspective. At the same time, the market remains exposed to a combination of natural catastrophe risk, macroeconomic volatility, and regional geopolitical developments. Consequently, international insurers and reinsurers typically assess Türkiye through a combination of catastrophe, economic, and geopolitical lenses rather than evaluating these factors independently.
The country's role in regional trade flows, logistics networks, infrastructure projects, and energy transit corridors can support demand across a broad range of insurance products. However, these opportunities are accompanied by a risk environment that requires ongoing monitoring and increasingly sophisticated risk assessment practices. In our view, the interaction between geopolitical, economic, and catastrophe risks is becoming more important than any single risk factor considered in isolation.
Looking ahead, we expect geopolitical considerations to become increasingly embedded in pricing, capacity allocation, and capital deployment decisions across the global insurance sector. Insurers and reinsurers are likely to place greater emphasis on scenario analysis, stress testing, exposure monitoring, and accumulation management as they seek to better understand the potential impact of complex and interconnected risks.
The availability of international reinsurance and investment capacity is typically influenced by a range of factors, including perceptions of economic stability, market transparency, regulatory effectiveness, catastrophe-risk management, and capital adequacy. Markets that demonstrate resilience and an ability to manage these challenges effectively are generally better positioned to maintain access to international capacity during periods of heightened uncertainty.
For Türkiye, the key issue will not be geopolitical risk alone, but how the sector continues to manage a broader set of interconnected risks, including macroeconomic volatility, catastrophe exposure, and evolving geopolitical dynamics. In our view, insurers that maintain strong risk-management practices, prudent underwriting standards, and sufficient financial flexibility are likely to be better placed to navigate an increasingly complex operating environment over the coming years.
8. TÜRKİYE: OVERALL ASSESSMENT AND FUTURE OUTLOOK
ENGLISH – ORIGINAL
Today, the Turkish insurance sector is navigating high inflation, earthquake risk, low insurance penetration, rapid digitalization and an ongoing regulatory transformation at the same time. This combination makes Türkiye a more complex and distinctive market than many traditional emerging economies.
Key Questions
• How would you position the Turkish insurance sector from an international perspective?
• How has the perception of Türkiye within international reinsurance markets changed in recent years?
• If you had to identify one structural strength and one structural vulnerability that will shape the Turkish insurance market over the next decade, what would they be?
• Looking ahead over the next five to ten years, what do you see as the biggest opportunities and the biggest risks for the Turkish insurance sector?
• If you were speaking to international investors today, what would be your key message about the future of the Turkish insurance market?
S&P’s Response
From our perspective, the Turkish non-life insurance sector has strengthened materially in recent years. This is reflected in our improved assessment of Türkiye's Property & Casualty Insurance Industry and Country Risk Assessment (IICRA), where we revised our view to moderately high risk from high risk previously, driven primarily by improvements in our assessment of industry risk. Key factors underpinning this change include stronger profitability, improvements in product-risk management, increased resilience to catastrophe events, and developments within the supervisory and operating framework.
From an international perspective, Türkiye remains a distinctive insurance market. Low insurance penetration and significant growth potential coexist with elevated macroeconomic volatility and substantial catastrophe exposure. As a result, the market presents opportunities that are accompanied by risk considerations not typically encountered in many other emerging insurance markets.
The sector's performance during a period characterized by high inflation, currency volatility, and major earthquake losses appears to have demonstrated a degree of operational and financial resilience. Nevertheless, macroeconomic conditions, catastrophe exposure, and the continued evolution of the operating and regulatory environment remain important considerations for external stakeholders assessing the sector. More generally, developments in financial markets can illustrate how investor confidence may be influenced by liquidity conditions, governance standards, and market transparency. While these developments are not specific to the insurance sector, they reinforce the importance of robust risk-management practices and effective oversight across the wider financial system.
If we were to identify one structural strength, it would be Türkiye's long-term growth potential. Insurance penetration remains relatively low by international standards, creating opportunities for expansion across a range of products and business lines. Rising awareness of insurance protection, demographic trends, and the development of new products and distribution channels could support growth over the longer term. Further progress in narrowing protection gaps, particularly in catastrophe-related and other underinsured risks, may also create opportunities for sustainable market expansion over time.
The principal structural vulnerability remains the sector's exposure to macroeconomic volatility and natural catastrophe risk. Inflation, claims-cost escalation, reserving pressures, exchange-rate movements, and catastrophe losses can create significant challenges for insurers' earnings, capital positions, and financial flexibility. Managing these risks effectively will remain an important factor in sustaining sector resilience.
Looking ahead, the most significant opportunities are likely to come from increased insurance penetration, enhanced use of technology and analytics, improving risk-management capabilities, and continued development of the insurance market. The principal risks are likely to remain linked to macroeconomic instability, inflation volatility, catastrophe exposure, and the challenge of sustaining technical profitability in highly competitive market segments.
From our perspective, international investors and reinsurers evaluating the Turkish insurance sector are likely to consider both its long-term growth potential and its exposure to macroeconomic and catastrophe-related risks. Future perceptions will depend largely on the sector's ability to maintain profitability, preserve capital strength, manage catastrophe exposure, and navigate a complex operating environment over time. While challenges remain, the sector's recent performance suggests a greater degree of resilience than in the past, although its ability to sustain that resilience through future economic and catastrophe cycles will continue to be an important consideration.
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