Russian life insurance market still growing, despite economic downturn

24 September 2015 — Olesea ADONEV
Despite the difficult macroeconomic conditions, strong devaluation of national currency, decline in consumer demand, massive rise by banks' interest rates and reduction in lending, the life insurance is the market segment which is showing a positive trend in the first half of 2015 year.

"As I have often said, life insurance did not immediately respond to the ongoing economics' negative trends. And now, despite the difficult market conditions, the life insurance market continued to show double-digit growth", said Maxim CHERNIN, General Director, SBERBANK Life Insurance and Chairman, All-Russian Insurance Association for the Development of Life Insurance.

As a result, in the first six months of 2015, life insurance business growth by 12.46% compared with similar period of 2014, to RUB 53.2 billion.

In times of difficult economic situation, the growth of popularity is experiencing such types of insurance as critical illness insurance and personal insurance line, due to understanding of citizens' need for these products to protect their families (note: in case of death, survival to a certain age or period or occurrence of an event).

"The growth rate continues to show personal insurance (life insurance and voluntary health insurance). On the one hand, this growth is due to the activity of the companies leading in this segment. But on the other hand, the growth of these types of insurance can be explained by the creation of a middle social level in Russia, in particular, those are the people who take care after their health, mortgage, think about their future, make savings", added Igor YURGENS, President, All-Russian Insurance Association (ARIA) and President Russian Association of Motor Insurers (RAMI).

In the reporting period, corporate life insurance segment has decreased due to reduction of the social packages offered by the many employers to their employees.

In recent years, bancassurance(credit insurance)has been one of the growth drivers for the insurance market, actively promoted by the banks.At the beginning of current year, the decrease of lending by 40% is one of the main drivers of the negative trend in terms of GWP taken by the Accidents, Motor Hull and Property insurance of legal entities linesand etc.

In this context, there have been significant structural portfolio changes of insurers, so if at the end of 2014 the share of bancassurance (credit insurance) was 56.4%, to the end of 2013 - 53.5% and in 2014 - was only 43.2%.

"Since the 2015 bancassurance (credit insurance) has been significantly decreased. We are actively working with our partners to improve the results in terms of lending for motor insurance, but in time we are doing it, we are witnessing the increase of price and banks interest rates on loans. Despite that, in terms of distribution channels is observed following stable trend, and namely the stable growing of the share of life insurance policies sold through intermediaries such as banks and car dealers: from 17% in 2008 to 76% in 2014", explained Alexander ZARETSKY.

Maxim CHERNIN added, that: "sales of the life insurance through the banking sector are no longer limited only to the traditional product of the credit life insurance. Today, there are no major banks, which would not offer their clients investment, endowment life insurance or Packaged products".

In depth details about the Russian life insurance market evolution in 1H2015 will be available in the forthcoming issue of XPRIMM Insurance Profile Russia, to be released on October, 18th, on the occasion of the Baden-Baden XPRIMM Reception (Kurhaus Casino, Runder Saal, 18:30 - 20:30 hours - register here).

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