Turkey’s Insurers Gear Up for Spate of Claims After 2nd Major Storm in 10 Days

By Tugce Ozsoy | July 28, 2017

The Borsa Istanbul Insurance Sector Index dropped as much as 2.5 percent on Friday after a brief but ferocious storm in Istanbul on Thursday showered the city with hail as large as golf balls, shattering windows, denting vehicles and damaging buildings.

The insurance sector decline was its biggest since June 15 and the largest among the Borsa Istanbul sub-indexes on the day. Anadolu Sigorta, the largest insurance company by market value, dropped as much as 6.8 percent. Ak Sigorta, a unit of lender Akbank TAS, plunged 7.5 percent.

“The market is pricing a potential increase in insurance claims following the storm,” Ovunc Gursoy, an analyst at Seker Invest in Istanbul, said by email on Friday. CNN-Turk television showed footage of damaged cars lined up at repair shops, and Hurriyet newspaper reported that the shops were facing shortages of glass. About 4 million vehicles in Turkey have insurance that covers glass repair, Hurriyet said.

The storm was the second in ten days to hit Istanbul, causing flash floods and temporarily paralyzing transportation networks. In both instances, subway stations flooded and a new tunnel beneath the Bosphorus was closed down.

Environmental Planning

While Turkish President Recep Tayyip Erdogan says his government has planted more than 3.5 billion trees in the past 15 years, critics say poor environmental planning and the destruction of green space during Istanbul’s rapid development accentuate the damage from natural disasters. Conflict on that subject was the spark that set off weeks of mass protests against Erdogan in 2013, after he tried to implement a plan to build in Gezi Park, a small green space at the heart of the city.

“What’s causing a disaster isn’t nature, it’s the intervention in nature,” the Istanbul bureau of the Turkish Chamber of Engineers and Architects said in a series of tweets posted after Thursday’s storm. Developers in the city have left the metropolis starved of green spaces and vegetation, and critical water drainage channels have been paved over with cement, making flooding more likely, it said.

Only about 2.2 percent of Istanbul is devoted to public green space such as parks and gardens, according to an index published by the World Cities Culture Forum, using data last updated for Istanbul in 2015. That compares with 27 percent in New York and 33 percent in London, and makes Istanbul’s ratio similar to the 2 percent in Dubai.

Ak Sigorta reported a profit of 34.2 million liras ($9.7 million) in the second quarter, compared with a loss of 10.2 million liras a year earlier, according to an earnings report released after the market close on Thursday. Anadolu Sigorta’s net income, reported the same day, was 37 million liras, down from 49.5 million liras a year earlier.

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