INTERVIEW: Irina MERZLYAKOVA, General Director, Belarusian Association of Insurers

2 April 2020 — Marina MAGNAVAL
INTERVIEW: Irina MERZLYAKOVA, 
General Director, 
Belarusian Association of Insurers
XPRIMM: How would you assess in general the market results in 2019? Would you note any big changes in the market volume, portfolio and ranking if compared to 2018?

Irina MERZLYAKOVA: 2019 turned out to be a quite successful year for the Belarusian insurance business. Compared to 2018, insurance premiums increased by 12.4% to USD 660 million. Total premiums in the voluntary insurance sector increased by 19.8%, and their share in the total amount of premiums increased from 58.4% in 2018 to 61.2% in 2019. I would also like to highlight a substantial upward trend in life insurance segment: we have witnessed a 38% growth compared to the previous period.

The number of market players remains the same - 15 insurers and 1 reinsurer. The ranking has not changed either: all insurers managed to keep their positions. But what is actually worth noting is that visible growth dynamic was demonstrated by the companies that actively apply bancassurance as one of their distribution channels.

So, overall, there were no dramatic changes on the market and Belarusian insurance business to a large extent can still be described as moto-insurance: for most insurers its share stands within 70-80 % of their portfolio. The main contributors in non-life insurance were voluntary health insurance and CASCO insurance for individuals.

The highest increase in premiums - 70% - was demonstrated by a private life-insurer, in non-life segment the highest growth scored an insurer that specializes in bancassurance - about 52%.

XPRIMM: Did the newly adopted Decree on Insurance help to improve a lot in the field of insurance? Would you underline any changes on the market in terms of business conditions for state-owned and private companies?

I.M.: Renewed legislation has somewhat simplified the conduct of business in the insurance sector in terms of administrative procedures, however, we still have to deal with unequal conditions of doing business for insurers of various forms of ownership.

I would classify all the changes into two groups: technical and fundamental. Technical part of the changes fulfilled our aspirations. A number of procedures were simplified and what is more important barriers to online insurance were finally eliminated, it really gave companies some breathing space. But what concerns fundamental changes, here unfortunately we haven't seen tangible measures on implementation of equal terms of doing business.

In particular, representatives of life insurance sector were pretty frustrated. Regulator maintained the legal provision according to which if an insurer is a subsidiary or dependent on a foreign investor, it can conclude contracts only with individuals.

Though, field of reinsurance did undergo a certain degree of liberalization. Now, local insurers can transfer their risks of their own retention which specifically amounts to 20% of their own capital to foreign insurance companies. However, since the own capital isn't so large, especially of private insurers, reinsurance of risks is usually limited within one million euro. Foreign insurance companies are also not particularly interested in such amounts. In addition, the options for reinsurance are constrained by another requirement according to which a company is allowed to reinsure its risks abroad, bypassing the Belarusian National Reinsurance Organization, only in companies that have ratings not lower than the country one, so in the end we have a very poor choice.

XPRIMM: Voluntary insurance market share increased last year from 58.4% (in 2018) to 61.2%, according to the data of the Ministry of Finance. What factors, in your opinion, support this up-trend?

I.M.: I see two aspects here. The first one is merely technical. Following the entry into force of the legislation adopted 1 September 2019, we have reduced tariffs for certain lines of compulsory insurance (except for MTPL), what concerns some other compulsory lines, for them tariffs are set in euros (for example obligatory medical insurance contracts for foreign citizens) and due to the stable exchange rates of foreign currencies against the Belarusian ruble, premiums simply did not grow. For these objective reasons we've got a slower growth rate of compulsory insurance premiums. The second aspect is the growing demand for large-scale insurance lines, such as Motor Hull insurance, voluntary health insurance, life insurance, medical insurance of travelers abroad, property insurance. We are pleased to note that today our citizens as well as local enterprises become more knowledgeable about insurance products and demonstrate a tendency of more conscious consumption of insurance services. Plus, we can't ignore life insurance tax benefits that came into force in January 2019, which allowed citizens to exempt from taxation the income spent on life insurance, supplementary pension insurance or medical insurance. All these - together with financial-literacy programs approved by the Government - are aimed to stimulate the predominance of voluntary insurance in the Belarusian marketplace.

XPRIMM: What perspectives, trends and results do you expect from the market this year (2020)?

I.M.: At present, it is very difficult to make any plans or give any long-term forecasts. But one thing is clear - the market already expects the decline. Today, there are practically no contracts for medical insurance of travelers abroad and the Green cards, a number of agents who used to work close to the borders were left without customers, major treaties come to an end or are suspended. Regrettably, it seems to me that this year there is little scope for optimism for insurance business.

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