MILLIRE_2019_Annual Report

Milli Re Annual Report 2019 62 India In line with the slowdown in the economy, India which has the 2 nd largest population in the world, the growth rate of the insurance market has also decreased. The growth figure of the Non-life for 2018-2019 period fell behind 17.4% growth rate of the previous year and realised as 12.4% and the premium production of the industry has reached to USD 24 billion. Government subsidised crop insurance scheme, which ranked 3 rd after the motor and health branches in terms of premium volume, continue to contribute significantly to the growth of the Indian insurance market. However, “Kerala flood” which occurred as a result of the highest rainfall in the last 25 years during the Kharif agriculture season, which is one of the two harvest seasons in India, had a negative impact on the results of the mentioned class of business. The merger of the state companies National Insurance, United Insurance and Oriental Insurance was decided by the government in order to have a stronger capital structure and to increase the profitability of the sector while terminating the competition. However, the merger was postponed to 2020 due to issues such as the size of the portfolios of the companies, the lack of a common human resource strategy and the absence of a new reinsurance structure. Pakistan Pakistan is the largest insurance market in the Indian Subcontinent after India, with its dense population and premium production of over USD 2.5 billion. Although the country struggles with problems such as terrorism and infrastructure deficiencies, it attracts the interest of many international reinsurance companies due to the high profitability and low insurance penetration. The Government of Pakistan cancelled the privatisation of State Life Insurance (SLIC), the National Insurance Company (NIC) and the Pakistan Reinsurance Company (Pak Re) at the beginning of 2019 but announced again that it will privatise 20% shares of the SLIC last September. The Pakistani insurance market regulatory body Securities & Exchange Commission of Pakistan (SECP) plans to make third party liability, group life and occupational health insurance compulsory to increase insurance penetration in the country. Softening in the terms and conditions such as rate reductions, increased commissions has been witnessed during 2020 renewals due to the absence of any significant natural disaster or major risk loss in 2019 as well as Pak Re’s aggressive underwriting policy to use its compulsory share in full and finally increased interest of the international reinsurance companies. Eastern Europe Eastern Europe insurance market continued its stable growth and increased its premium income by 6.11% to EUR 19.86 billion in the first half of 2019. While the Non-life insurance premium accounts for 68% of the region’s total premium production, 32% of the premium is generated by life. Motor insurance continued its dominance in the overall premium production with 54%. As a consequence of the severe weather events in the region, there have been significant increases in the property claims in Latvia, Romania, Serbia, Czechia and Bulgaria. The Eberhard Storm affecting the UK, Belgium, the Netherlands, Austria, Germany, Czechia, Poland in March 2019 and the 6.4 magnitude earthquake that occurred in Albania in November 2019 are the major natural catastrophes in the region during the year. Given the low insurance penetration in the region, the insured loss from these events is expected to be limited. In January 2020 renewals, while the rates of loss affected catastrophe excess of loss treaties increased between 2.5% and 7.5%, the rates of loss free treaties have been reduced by 5%. In respect of risk excess of loss treaties, rates for the loss affected treaties increased by 5% to 20% and the prices of loss free treaties have been reduced by 2.5%. GLOBAL REINSURANCE MARKET AND MİLLİ RE