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Russia Insurance Report Q4 2011
Business Monitor International, Sep 2011, Pages: 79
Business Monitor International's (BMI) Russia Insurance Report (Q4 2011) provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Russia's insurance industry.
Russia’s insurance sector is one that is large in absolute terms and compared to other countries in the region. It is also growing rapidly and data published by the Federal Service for Insurance Supervision (FSIS) in August 2011 showed total premiums in H111 were about 19% higher than in H110.
Double-digit growth was achieved in most of the major lines. However, there was one important exception. New rules require that an amazingly fragmented sector will need an estimated RUR50bn in new capital prior to early 2012. Together with the strong organic growth in insurance, this has caused a frenzy of deal making, as companies have merged to gain the size that they need, or to pursue other corporate opportunities, whether perceived or actual. Unfortunately, for international insurers that are not yet established in Russia, foreigners now account for 25% of the aggregate capital of the sector and this is the maximum permitted under the present rules. The competitive landscape will look quite different in a year’s time.
The non-life segment continues to be dominated by compulsory medical expense insurance (CMEI), which accounts for almost half of all premiums. CMEI premiums in H111 were 24% higher than a year earlier, suggesting that growth has been underpinned by higher tariffs and/or improved products. By contrast, compulsory motorists third-party liability (CMTPL) insurance premiums expanded by just 3% year-on-year (y-o-y). Compared to H210, CMTPL premiums actually fell. This suggests that, as has been the case in other countries in Central and Eastern Europe, there has been intense price competition.
Voluntary medical insurance and motor CASCO grew by about 20% compared to H110. Property fire/all-risk lines have been growing at a slower, but still respectable 13%. These figures indicate that non-life penetration continues to rise steadily, which is a consistent trend that has been in place for years.
In general, Russians do not trust life insurance companies with their savings. However, the 64% y-o-y rise in premiums in the embryonic life sector in H111 suggests this is changing for some individuals. BMI doubts that life insurance will emerge as an important conduit for long-term savings during the forecast period. For some foreign groups that have the right distribution agreements and/or attractive products, there will still be opportunities in the Russian life segment.
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