Impact of Engineering Insurances on the Growth of Turkish Construction Sector

Suna Ozyuksel and Yavuz Bacak

International Journal of Economics and Finance, 2020, vol. 12, issue 8, 28

Abstract: Engineering insurances are significant risk transfer instruments in terms of construction risk management. The construction sector comprises approximately 8% - 9% of the GDP of Turkey and employs 2 million people according to 2019 data. It plays a vital role in the economic development of Turkey. When the direct and indirect effects of the construction sector are taken into account, its share in the economy of Turkey reaches around 30%. Construction projects are investments that bear various risks and need meticulous execution. For this reason, it is thought that proper management of the associated risks in the construction sector by means of the risk transfer to insurance sector via engineering insurances will contribute the sustainable growth of the construction sector. In this context, the effect of engineering insurances on the growth of the construction sector is examined empirically, and positive results have been reached. The increase in the use of engineering insurance constitutes a reason for growth of the construction sector. Results of the Granger Causality test, conducted for analysis of causality, indicate that there is causality. Additionally, a mathematical model is investigated in order to observe the effect of the engineering insurances growth, on the growth of the construction sector by utilizing the simple linear regression method. In the study, the model is found to be statistically significant. As a result of the model, it is shown that the growth of engineering insurance has an impact on the growth of the construction industry.

Date: 2020
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