MILLI REASURANS ANNUAL REPORT 2018

Milli Re Annual Report 2018 60 / Financial Status In addition to the above expectations, Saudi Arabia Monetary Authority (SAMA) is almost finalizing the regulation on mandatory health insurance for the expatriates in the country. After the inurement of the specified regulation, a significant augmentation for health insurance premiums is definitely anticipated. In the event of approval of the bill regarding the change in the upper limit of foreign direct investment from 49% to 100%, this will lead up to new investments that would encourage the growth of the insurance sector in the long run. The Egyptian Insurance Regulatory Authority (FRA), aims to raise the total insurance premium in the country to EGP 50 billion (USD 2.8 billion) by 2022, wording a national strategy plan for non-bank financial services which is currently in the draft phase. Introduction of the compulsory third party liability insurance for various occupational groups, development of insurance legislation, promotion of innovative insurance products as well as the promotion of insurance awareness are the hot topics in the mentioned plan. North Africa Having the highest insurance penetration and density rates compared to other markets of the region, Morocco, Algeria and Tunisia continue to attract the interest of many reinsurers who aspire to accept businesses from these emerging markets of North Africa. In Morocco, the leading insurance market in North Africa, despite the termination of compulsory cession enforcement, Société Centrale de Réassurance (SCR) still dominates the market because of its long lasting relationship with the market players built over the years. Algeria being one of the largest insurance markets in North Africa, has not reached to the desired level although it is one of the biggest economies in the Region owing to its rich oil and gas reserves. The market attracts the attention of the international reinsurers. However, since CCR (Compagnie Centrale de Reassurances) is the state owned reinsurance company enjoys 50% compulsory cession, the international reinsurers find it hard to enter the market or increase their premium level. Being much smaller than Moroccan and Algerian markets; Tunisia preserves its stance as being more open to foreign reinsurers. As a result of the abundance of the insurance companies in the market as well as the regional reinsurers opening offices in the country, the competition increases. Apart from the floods occurred in Tunisia, there was no big natural disaster or major risk loss in the North Africa region and the frequency of small risk claims was similar to the previous years. Loss affected programmes have seen 9% rate increases while the rate decreases for loss free programmes stand around 5%. India In 2017, India’s premium production reached USD 98 billion, representing 2% of world’s gross premium production. Low insurance penetration on one hand and 1.3 billion population on the other, India is most certainly a hot spot for the insurance industry. After the regulator IRDAI’s approval allowing foreign reinsurers to open up branch offices in India in 2018, foreign reinsurers continue to support the market on the facultative side instead of growing their treaty portfolio. With the intention of forming a stronger capital structure, the merger of National Insurance, United Insurance and Oriental Insurance, all being state owned companies, still remains on the agenda and is expected to be finalised during 2020 Pakistan Compulsory cession to local reinsurer, Pakistan Re, continued with 35%, with the exception of takaful businesses. However, company obtained its re-takaful license as of 1 st of October, 2018. With the “China Pakistan Economic Corridor” infrastructure treaty signed by the governments of China and Pakistan; “Naya Pakistan” mass housing project; widespread use of health insurance incited by the government and finally the policy of Securities and Exchange Commission of Pakistan’s (SECP) more active role in the insurance industry, further growth is expected in the insurance market. In the absence of any catastrophe or large risk losses, commission rates of the profitable proportional treaties were increased and 5% to 15% rate reductions were observed in the loss free XL programmes. GLOBAL REINSURANCE MARKET AND MİLLİ RE IN 2018