Insurance firms' attitude toward high risk sector saps exports

The insurance companies' strict policies against high risk sectors are dealing a major blow to Turkey's target of reaching $500 billion (TL 1.08 billion) in exports in 2023. It was revealed that insurance companies are not willing to provide insurance coverage to various high-risk sectors, which are at the same time crucial sectors for exports in Turkey.

Companies engaged in various sectors including furniture, wood, plastic, shoe, pallet, match, packaging and paint using inflammable materials in their production cannot meet the high insurance coverage amounts requested by the insurance companies.The chairman of Insurance Underwriters and Agencies Association (SAAD) Irfan Uzun said that especially after foreign insurance companies entered the sector, various SMEs that use inflammable materials during production are unable to take out insurances or pay high insurance premiums set.

Noting that due to this conduct, that occurred mostly within the last two years, is preventing companies from exports and also taking out bank loans. "A pallet company had to pay the TL 80,000 loss out of its own pocket in order to not to lose its coverage and to be able to take out further loans. There are many organizations that had to close down due to these restrictions in the insurance sector," said Uzun.

He also added that many companies are taking out insurance policies with high coverage or franchises, which means that only a part of the damage claim is covered by the insurance company. In other words, if there is a 50 percent franchise on the insurance policy, it means that only TL 500,000 of a loss around TL1,000,000 will be covered. Further, many companies, in order to continue their export transactions with taking out loans, have to surrender to insurance policies with high premiums and franchises.

The owner of Bozacıoglu Insurance, Özcan Bozacıoglu said that the problem lies in the Reinsurance sector since insurers share half of the risk with the Reinsurance Companies; pay half of the premiums they obtained from the insurance holders. "When reinsurers do not want to insure high-risk groups, the risk only remains with the insurer and is reflected in the premiums," said Bozacıoglu. The Chairman of Turkish Shoe Industry Association, Hüseyin Çetin said that insurance companies are being extremely strict in terms of occupational safety.

Complaining about the various demands of the insurance companies Çetin said that companies are trying to meet these incomprehensible demands of the insurers in order not to face any excuses for not paying any claims in case of fires or floods and as result, exportation suffers.