The Russian MTPL - a market still in distress

According to the Russian Central Bank's report, in 2016 GWP in MTPL insurance increased by only 7.17%, while in 2015/2014 GWP growth was of 45%. The trend is expected to continue also in 2017.

Despite the vehicle market recovery and a certain stabilization in the MTPL segment in terms of the number of insurance contracts, as well as a gradual increase in the MTPL tariffs, the motor insurance segment's development was delayed. Moreover, statistical data show that in about 30 regions the MTPL loss ratio reached 150%, while in other this index exceeded 200%.

"First of all, I would like to draw attention to a sharp increase in the loss ratio on MTPL in 2016, the biggest annual level ever recorded - 70%. We've never recorded such an important annual increase in the losses, as the highest percentage so far was in 2010 and 2014 - 59%. Secondly, the insurance claims on this segment increased by 39.71% (note: xprimm calculation). This is a direct consequence of the increase in the MTPL limits approved in 2014, and even the evolution of the tariffs in 2015 did not influence this situation," explained Igor YURGENS, President, All-Russian Insurance Association (ARIA) and President of the Russian Association of Motor Insurers (RAMI).

As for the Motor Hull segment, Igor YURGENS stated: "we are noticing a decrease in premiums by 8.85% compared to the previous year, to RUB 170.7 billion, according to the Bank of Russia's statistics. However, the decrease rate is slowing down, as this rate it was 14.3% in 2015 compared to 2014. Here we have a better loss ratio, 57.1% in 2016 compared to 76.9% in 2015; the claims paid also posted a decrease of 32.3% and amounted to RUB 97.5 billion. Perhaps these trends for the motor insurance industry will continue in 2017 as well."

Several issues such as the growth of the loss ratios in some regions, the decrease in customers' confidence, the increase in the number of fraud cases, and a sharp increase in insurers' costs for litigations solved in court with the direct implication of the motor lawyers remain far from being solved. According to the Russian Association of Motor Insurers (RAMI), in 2016 the fraudulent claims in MTPL have cost the insurance companies about RUB 30 billion. The most part of the non-insurance payments, about RUB 25 billion, were caused by the activity of criminal motor lawyers.

Read a comprehensive analysis of the Russian insurance market's evolution in 2016 in the latest issue of XPRIMM Insurance Profile RUSSIA - FY2016.

The bilingual publications includes the 2016 financial results of the insurance market, from gross written premiums and mediated premiums to claims paid last year, but also aspects such as reinsurance statistical data, the insurance companies' GWP portfolios etc.


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