Assessing the impact of inflation on the premium production and market value of ınsurance companies

Purpose-The purpose of this study is to analyze the relationship between inflation, premium production, and market value of insurance companies operating in the insurance sector listed on Borsa Istanbul, and to determine the direction of causality among these variables.. Methodology-In this study, quarterly data of six insurance companies operating on Borsa Istanbul for the period between December 2014 and June 2025 were utilized. In the analysis, the variables used were the inflation rate (INF), total premium production (LNPP), and the market-to-book value ratio (PB). Unit root tests were applied to examine the stationarity of the variables, and the Granger causality analysis was subsequently conducted to determine the causal relationships among them. Findings-The analysis results indicate a statistically significant bidirectional causal relationship between the inflation rate and premium production. This finding reveals that both variables mutually influence each other. In contrast, no statistically significant effect of inflation on the market-to-book value ratio of insurance companies has been identified. Conclusion-These findings are consistent with the direction of the relationship predicted by the theoretical framework and align with the general trend observed in the existing literature. In this context, it can be stated that an increase in inflation weakens premium production and indirectly reduces market value, whereas lower inflation enhances premium production and strengthens the financial performance of the sector. The results emphasize the importance of maintaining price stability to ensure sustainable growth in the insurance industry. Therefore, policymakers and industry managers should take inflation dynamics into account when developing pricing strategies and long-term risk management policies. Keywords: Inflation, premium production, market value, ınsurance companies, Granger Causality JEL Codes: G22, E31, C32