Russia: stability, improved quality and huge growth potential

6 April 2017 — Oleg DORONCEANU, Vlad BOLDIJAR
Roman_TOCHILINThe Russian re/insurance has reached a stable status in 2016, both in regulatory and structural terms, as well as in what the premium production is concerned, representatives of the official market bodies said yesterday in Moscow.

"Many companies left the market due to the tighter legal requirements, the trend resulting in market with fewer players, but more transparent, easier to understand, analyze and supervise. Overall, confidence in the market has increased. In terms of quality, 2016 was the year in which the Russian re/insurance market has skyrocketed," Roman TOCHILIN representative of the Central Bank of the Russian Federation, the insurance market's watchdog said on the occasion of the XXIst edition of the Annual Reinsurance Conference (ARC), in Moscow.

He also pointed out that, despite the halved number of players, in comparison with 2010, the aggregated value of the market capital was maintained, "while the capital quality has clearly improved."

Vera-Yuryevna-BALAKIREVAVera Yuryevna BALAKIREVA, Deputy Director of the Financial Policy Department in the Russian Finance Ministry, has emphasized the growth drivers in GWP terms: "the market grew last year, supported by three major classes: life insurance, accident insurance policies and motor third party liability. In fact, all three segments have also increased their share in the aggregate market GWP. The trend was most visible on life insurance segment, which after declining for three years in a row, has seen a strong recovery, benefitting also from the increasing financial investments' revenues."

"The interesting thing is the fact that mediation fees have plummeted compared to 2015, when the acquisition cost practically accounted for one quarter of the price charged for an insurance policy. One of the explanations may lay in the online sales development, even if this channel is still far from being a prevalent one," TOCHILIN said.

"In the medium term, the Russian re/insurance market's prospects are positive. For example, the growth rate recorded last year by the re/insurance industry exceeded the overall dynamic of the Russian economy," added Aleksey Alesandrovich BREDIKHIN, Director, Rating Research Credit Agency. He also explain that given the very low insurance penetration, considered as share of the re/insurance premiums in GDP in comparison with the values taken by this indicator in the USA or the EU, the Russian market has a huge growth potential.

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