MILLIRE ENG2024

Central and Eastern Europe (CEE) Central and Eastern Europe (CEE) has shown strong economic growth in recent decades, but it still falls behind major economic powers like North America and Western Europe. Most CEE countries have recovered from the effects of the COVID-19 pandemic, but their economy is stabilizing at lower growth levels due to inflation and global uncertainties. In 2024 the region is expected to experience moderate economic growth, lower than pre-pandemic rates but it’s still resilient considering global economic pressures. The region’s economy is forecast to grow at 2.6% in 2024 following muted real GDP growth of 0.8% in 2023. Inflation continued to pose significant challenges across Europe whilst high inflation rates caused higher material and service costs, which subsequently drove up claim settlements and operational expenses. Rising costs of claims due to higher material and labor prices, coupled with increased frequency and severity of natural disasters, especially floods that affected the region challenged local agricultural sector, have put pressure on underwriting profitability. The war in Ukraine has had a profound impact on the CEE region, particularly in neighboring countries like Poland, Romania, and Slovakia. Following the economic disruptions caused by the war in Ukraine, most CEE countries have seen signs of recovery in 2024. However, inflation and supply chain issues remain challenges. Economic growth is projected to remain moderate, affecting the insurance sector. The insurance industry has faced challenges related to geopolitical risk, with insurers needing to adapt their coverage and pricing models to account for the increased risk in the region. This has also led to increased demand for certain types of insurance, including life, health, and property insurance, as well as broader coverage against risks related to military conflict. In the first half year of 2024, gross written premiums for the CEE region totaled EUR 26.3 billion, an increase up by 7.48% year over year. Meanwhile, claims paid decreased by 4.38% year on year to EUR 11.4 billion. All CEE markets saw a positive dynamic, in many cases at double-digit growth rates except for Slovenia. The highest growth rates belong, in general to the smaller markets as Kosova, Albania, Bosnia & Herzegovina. A new compulsory health insurance contribution (Obvezni zdravstveni prispevek - OZP) came into force in Slovenia on 1 January 2024. The previous annuity was a contribution on a voluntary basis for additional health insurance covered by insurance companies. The new mandatory, fixed rate health contribution has started to be managed by the public Health Insurance Institute of Slovenia. Insurance penetration in CEE varies by country but is still relatively low compared to Western Europe. However, the region is expected to continue growing as the middle class expands and consumers increasingly recognize the value of insurance products. Life insurance and motor insurance remain the largest segments. There has been increased interest in health and life insurance products. Private health insurance, especially supplementary policies, has seen growth, particularly in markets like Poland, Hungary, and the Czechia. Many insurers have also begun offering more flexible life insurance products, combining life coverage with investment or savings components, as a way to attract a broader customer base. The European insurance industry is highly regulated. Regulatory developments in CEE are keeping pace with EU-wide changes, particularly those related to the Solvency II Directive, data protection (GDPR) and sustainability regulations. Insurers need to comply with these adjustments, which focus on maintaining solvency and protecting customer data. Some local markets have also introduced or are in the process of introducing reforms to improve market transparency and consumer protection. Insurance penetration in CEE varies by country but is still relatively low compared to Western Europe. GENERAL INFORMATION FINANCIAL RIGHTS PROVIDEDTOTHE MEMBERS OF THE GOVERNING BODY AND SENIOR EXECUTIVES RISKS AND ASSESSMENT OF THE GOVERNING BODY ACTIVITIES AND MAJOR DEVELOPMENTS RELATED TO ACTIVITIES RESEARCH & DEVELOPMENT ACTIVITIES FINANCIAL STATUS FINANCIAL INFORMATION 67 2024 Annual Report