Best’s News & Research Service - February 07, 2023 01:59 PM (EST)
Best's Commentary: Devastating Earthquakes Add to an Already Challenging Operating Environment for (Re)insurers in Türkiye
- February 07, 2023 01:59 PM (EST)
London //BestWire// - The impact of two powerful earthquakes in south-eastern Türkiye on 6 February, 2023, represents another blow for the local (re)insurance industry, according to a new commentary from AM Best.
While initial information indicates that insurance penetration in the region is relatively low compared with the most populous centres in Western Türkiye, the tremors occurred against a backdrop of a prolonged period of extreme economic turbulence, which AM Best believes significantly weakened the creditworthiness of the local (re)insurance market.
A new Best’s Commentary, “Devastating Earthquakes Add to an Already Challenging Operating Environment for (Re)insurers in Türkiye,” notes that while earthquake insurance is compulsory for residential homes, there is no legal penalty for not being covered. Consequently, AM Best expects that – as with previous natural disasters in the country – there will be a significant variance between the economic and insured losses from the two earthquakes.
Although AM Best expects outwards reinsurance to partly protect the balance sheets of local (re)insurers from the impact of the recent catastrophes, the tragic events represent yet another headwind for a market already facing an extremely challenging operating environment, characterised by significant inflation and a weakening currency.
To access a complimentary copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=328635 .
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.