After years of positive high dynamics, insurers of the CIS space are confronted with a difficult economical environment: decreasing demand for insurance products and the falling currency exchange rates all over the region are putting a high pressure on the costs and profitability. Overall, GWP in the region went down y-o-y by 3,3% in European currency.

The strongest negative changes in GWP were seen in Kazakhstan (-26.5%) and Azerbaijan (-19.2%), countries where the local currencies have suffered massive devaluations against the Euro. In local currencies, both markets have recorded positive double digit growth rates. In the overall picture, the only 3% fall in GWP was supported by the relative stable situation of the Russian market which accounts for iver 82% of the regional GWP.

Several countries in region (Armenia, Azerbaijan, Georgia) are experiencing changes in the motor insurance regulations. Other countries, as Azerbaijan, Georgia and Kazakhstan are taking steps to introduce different systems of mandatory health insurance system.

To improve the market's stability, countries as Belarus or Ukraine have imposed higher capital requirements and have performed stress tests in order to identify the vulnerabilities. As a result, the market's concentration is more or less a general trend across the region. Thus, in Russia, although the market has already "lost" tens of companies, most of them being removed the licence because of the insufficient level of capitalization, there are still some hundred companies on the "red" list. M&A operations are part of the current market restructuring in some of the CIS countries, as Azerbaijan or Ukraine. Moreover, in Moldova five of the top insurers are under special surveillance, a major change of ownership being expected.

Finally, the establishing of the new National Reinsurance Company in Russia, currently preparing to become active at the beginning of 2017, is raising concerns with regard to future of the reinsurance business carried on by the present players.

Overall, CIS markets are facing "turbulent" times, strongly affected by the volatile political environment, as well as by the high dependence of their economies on the petrol price. Yet, in the long run, their potential is unaffected and the ongoing modernization of the regulatory framework is creating new opportunities.

Read a comprehensive analysis of the trends recorded in the CIS insurance markets, as well as regional and country statistic data in the latest issue of the XPRIMM Insurance Report CEE, SEE & CIS 1H2016.