Russia Insurance Report Q1 2015 - New Market Research Report

From: Fast Market Research, Inc.
Published: Fri Dec 19 2014


Continuing steady growth in compulsory medical expenses insurance (CMEI) will underpin the rise in premiums in the non-life segment, while life premiums will rise rapidly from a very low base. Recent regulatory changes will boost motor insurance premiums. However, the changes will also boost claims - at a time that profitability is at the lowest level for six years.

As of late 2014, the latest developments in Russia's insurance sector confirm our expectation that non-life premiums will sustain steady mid-single digit growth through the forecast period. By contrast, we think that life premiums can rise by around 15-20% annually for much of the forecast period, as organised savings develops from a very low base.

Full Report Details at
- http://www.fastmr.com/prod/904312_russia_insurance_report_q1_2015.aspx?afid=303

Recent intervention by the government and the regulation has not been helpful. New rules that came into effect in October are likely to boost compulsory motorists' third party liability premiums, but will increase claims payments to a greater extent. This is at a time that, according to the trade association, returns on equity have fallen (in H114) to a six year low of 4.1%. Meanwhile, CMEI continues to account for about half of all activity within the non-life segment: but for this line, non-life penetration would be well below 2% of GDP.

There was a time when foreign multi-nationals saw Russia as an important market opportunity. That time is well past. Recent news has included sales of businesses in the country by two foreign majors, and a scaling back of activity in the non-life market by a third.

Recent Developments

* In mid-October 2014, the Central Bank of Russia (CBR) published new rules for compulsory motorists' third party liability (CMTPL) covers which set out standardised guidelines for the sizes of claims payments and the assessment of damages by independent experts. The insurers believe that the new rules will substantially increase the amounts that are paid out in claims. Basic premiums will also be increased.
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