MILLIRE 2021 ANNUAL REPORT

ACTIVITIES AND MAJOR DEVELOPMENTS RELATED TO ACTIVITIES GENERAL INFORMATION FINANCIAL RIGHTS PROVIDED TO THE MEMBERS OF THE GOVERNING BODY AND SENIOR EXECUTIVES RESEARCH & DEVELOPMENT ACTIVITIES 46 MİLLİ RE ANNUAL REPORT 2021 TURKISH INSURANCE MARKET Series of natural catastrophe losses throughout the year, impact of competitive pressures on prices and terms, uncertainty stemming from record hikes in inflation and the exchange rate volatilities particularly in the last months of the year, which culminated on top of the ongoing effects of the pandemic in various areas, put heavy pressure on the local insurance industry with respect to growth and technical profitability. According to 2021 year-end figures published by the Insurance Association of Turkey, insurance industry in Turkey generated TL 105.3 billion premium with an increase of 27.5% over the previous year. This nominal growth corresponds to a contraction of 6.3% in real terms in view of the inflation factor. Corresponding to 83.2% of the sector’s premium, Non-Life premium amounted to TL 87.6 billion with an annual nominal growth by 28.5%. Nevertheless, the Non-Life insurance sector showed a reduction of 5.6% in real terms, particularly because of the relative contraction in the Land Vehicles Liability that has 27% share in total premium. In Life, nominal growth was 22.8% in connection with the movement in the volume of individual loans, and the share of the branch in total premium went down from 17.5% to 16.8%. Premium income from Land Vehicles Liability which still is the largest segment in the industry remained limited due to intense competition and price cap application against the significant increase in bodily injury and physical claims reflecting the hikes in the inflation and exchange rates as well as regulations that pulled loss amounts up. Consequently, the line showed a nominal growth of 13.8% and a contraction of 16.4% against the inflation, and its share in Non-Life total premium dropped from 30.1% to 26.6% also constraining overall industry growth. The share of Land Vehicles in Non-Life was 16.3% share. Despite some positive adjustments in policy rates reflecting significant increases in vehicle values and spare parts, decline in the penetration in this line dropping to 20% due to weakened purchasing power of consumers and competitive pressure on prices resulted in an annual nominal growth of 33.1%, which translated into a contraction by 2.2% in real terms. Owing to the strengthened positive perception of Health insurance during the pandemic and the reflection of medical inflation on premiums, income from Private Health and Complementary Health Insurances grew by 29.5%, while Complementary Health Insurance specifically registered a real growth of 27.3%. Although the annual real change in total premium from Health shrank by 4.8% in real terms, the line was able to preserve its 15% share in Non-Life. The share of Fire and Natural Catastrophe Perils in Non- Life premium rose to 16% in line with the 32.7% nominal increase in premium income. Although it corresponds to 2.5% contraction in real terms, Fire and Natural Catastrophe Perils was among the main drivers of growth in the Turkish market. Fire has 68% share in total premium income of the branch and was able to grow by 36% on annual basis. While economic conditions and drop in purchasing power put IN 2021, THE INSURANCE INDUSTRY IN TURKEY PRODUCED TL 105.3 BILLION PREMIUM WITH AN INCREASE OF 27.5%.

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