BELARUS, FY2011: Insurance market shocked by BYR "hyper-devaluation"

24 February 2012 — Vlad BOLDIJAR
xcom_statisticAccording to results published by The Belarusian Association of Insurers, in 2011, total premiums in the insurance market rose in local currency by 76% year-on-year to BYR 2,362 billion. In European currency, due the devaluation of BYR in relation to EUR, the insurance market did not show growth in terms of written premiums: EUR 219 million, representing a decrease of 35%.

The year 2011 was "the crisis one" for The National Bank of Belarus (NBB). Just in one year, NBB strongly devalued the official rate of national currency: the exchange rate as of December 31st, 2011 was set at 10,800 BYR per EUR, almost triple compared to last day of 2010. This fact had a major impact for the insurance market year-on-year comparative calculations.

In 2011, 24 players operated in the Belarusian insurance market, four of these specialized on life segment, nineteen non-life insurers and one exclusive reinsurance company.

The insurance concentration by total GWP of the first 5 companies increased from 75.5% in 2010 to 76.7% in 2011, while more than 80% of GWP were provided by state fully owned or controlled insurers.

This is due to the fact that the state grants its insurance companies a number of significant privileges allowing state-owned insurance companies to dominate the market. According to the Belarusian legislation, compulsory insurance can be only provided by fully state-owned insurers or insurers with more than 50% state ownership. Also, in the segments of life insurance, property insurance performed by state organizations, insurance companies with more than 49% foreign ownership are not allowed.

Last year, Anton NEDVEDSKY, External Relations Manager, Belarusian Association of Insurers, explained in an interview that "insurers expect an adoption of a presidential decree, which includes a number of liberal moments for the insurance market. Insurers hope that the decree will lift restrictions for foreign investors in life insurance. (...) The insurance market also expects the introduction of new insurance classes, improving the quality of insurance services and the possibility for private insurers to practice mandatory MTPL insurance".

According Belarusian Telegraph Agency, Prime Minister, Mikhail MYASNIKOVICH, intents to get involved in the insurance market's development process. Last week he strongly suggested "the Belarusian Finance Ministry and interested agencies should put efforts into attracting major investors to the Belarusian insurance market".

According to Mikhail MYASNIKOVICH, the development of the securities market is slow due to unresolved issues relating to insurance services. He said "one unfinished institution slows down the development of another one. As a result, the effectiveness of the entire financial system is low. Capital is consumed and exported instead of working for the benefit of the economy", BelTA reported.

The share of insurance contributions in Belarus' GDP is still infinitely small (0.86%). Government agencies have prepared a draft decree to liberalize the insurance industry, "however, the document has not been agreed yet. Besides, an entire stratum of legal documents will be required to build upon the decree", underlined the local media.

The Prime Minister gave instructions to take concrete steps to develop and enable effective operation of the insurance market. "In 2012 it is necessary to launch the insurance services market based on a modern legal base and to attract major investors in this area", added Mikhail MYASNIKOVICH, quoted by Belarusian Telegraph Agency.

Access www.xprimm.com and download the FY2011 Belarusian insurance market statistics.

Market portfolio (in EUR and BYR):
  • Gross written premiums
  • Paid claims 
  • Growth rates
Market rankings - in EUR and BYR (GWP/Paid claims/Market shares/Growth rates):
  • All insurance lines ranking
  • Life insurance ranking
  • Non-life insurance ranking

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