RUSSIA: insurance market growth is expected at 8-9% in 2021

22 June 2021 — Marina MAGNAVAL
Expert RA rating agency has developed various development scenarios for the Russian insurance market for 2021 and does not expect the market to drop in any of them.

At the same time, according to the baseline scenario, the market growth is expected at the level of 8-9%, up to RUB 1.68 trillion (~EUR 19.53 billion*), ASN wrote.

According to the baseline scenario, Expert RA expects moderate rates of recovery in the insurance market following the economic recovery. The gradual expansion of consumer and investment demand will have a positive impact on the market recovery.

"According to the baseline forecast of Expert RA, the non-life market will grow to RUB 1.13-1.14 trillion (+2-3%), total market (life + non-life) - up to RUB 1.67-1.68 trillion (+8-9%). If the conservative scenario is realized, non-life GWP will show a slight negative trend (in the range from minus 1 to 0%), but the market in general (life + non-life) will grow by 3-4%", the rating agency said in its forecast. According to the baseline scenario, the life insurance market will grow to RUB 540 billion (+25%), thus maintaining its leading positions.

Among the main challenges for the insurance market in 2021, the agency noted a decrease in loss ratio after its increase in 2020 and a decrease in investment income amid a slowdown in the growth of the stock market. Also, the need to adapt to the new solvency requirements, which come into force on July 1 for most companies, may affect the solvency indicators. In addition, the new rules for sales of investment life insurance and accumulative life insurance products will become a serious challenge since there is still a great deal of uncertainty about their impact on the market.

The NRA (National Rating Agency) noted in its analytical review that life insurance paid claims in 2021 could grow up to 50%, by about RUB 100 billion y-o-y. At the same time, the growth of life insurance GWP, according to the NRA, may reach 5% in 2021. The main influence will be exerted by active participation of banks in the sale of insurance products, low rates on deposits and changes in taxation of interest income on deposits.

Vice-President of the All-Russian Insurance Association Viktor DUBROVIN noted, in his opinion, the volume of paid claims in life insurance in 2021 will be the record and exceed RUB 350 billion, while GWP will increase by 10% y-o-y.

* at the following exchange rate:

1 EUR = 85.9943 RUB (19.06.2021)

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