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Bancassurance in Russia: Life, Non-Life and Creditor Insurance Product Image

Bancassurance in Russia: Life, Non-Life and Creditor Insurance

  • Published: November 2011
  • Region: Russia
  • Finaccord

PUBLICATION OVERVIEW

Finaccord’s report titled Bancassurance in Russia: Life, Non-Life and Creditor Insurance is about the distribution of insurance products through banks and other lending institutions in Russia.

Types of insurance considered are:

- investment-related life insurance and retirement savings;
- risk life insurance, critical illness insurance and income protection insurance;
- accident insurance, medical expenses insurance and health / hospital cash plans;
- personal motor insurance and household insurance;
- creditor insurance for mortgages, consumer finance and credit cards.

Based on a survey of 74 organisations, it identifies 239 bancassurance distribution initiatives across these types of insurance, and highlights the operating models and product providers used in the vast majority of cases. Moreover, it analyses these bancassurance agreements in terms of ‘weighted partnerships’ which take into account the size of the retail customer base of the banking institutions distributing these policies, thereby differentiating between the most important relationships and those that are comparatively minor.

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0.0 EXECUTIVE SUMMARY

1.0 INTRODUCTION

What is this report about?

Distribution partnerships with banks and other lending institutions constitute the focus of this report

Rationale

Across Europe, over 80% of banking entities surveyed are active in this arena to one extent or another

Methodology

Survey of banks and other lending institutions

Market data

Definitions

Investment-related life insurance

Retirement savings

Risk life insurance

Critical illness insurance

Income protection insurance

Accident insurance

Health / hospital cash plans

Medical expenses insurance

Personal motor insurance

Household insurance

Creditor insurance

Mortgages, consumer finance and credit cards

Weighted provider share of partnerships

Operating models

Abbreviations and exchange rates

Finaccord

2.0 MARKET ANALYSIS

Banks and other lending institutions covered

Introduction to the banking sector

Banks owned ultimately by the state continue to exert a strong influence on Russia’s banking sector...

... with several foreign banks having decided to exit the market

Russia’s banking sector has changed very significantly in recent years...

... with a new wave of merger and acquisition activity in evidence since 2008...

... and with further changes in the market structure likely to occur

In spite of its problems, there is plenty of scope for the Russian retail banking market to grow

Investment-related life insurance and retirement savings

Insurance market size and growth

Most of the market is likely to be composed of contributions to non-state pension funds (NPFs)

Distribution share of banks

The primary bancassurance focus of Russian banks lies on creditor and motor insurance

Bancassurance provision rates, operating models and partnerships

Investment-related life insurance

Few banking entities promote any form of investment-related life insurance

Retirement savings

Around a quarter of major banking institutions promote non-state pension funds...

... in many cases through their own captive vehicles

In total, a dozen NPFs possess bank distribution partnerships...

... although a number of significant banking institutions have not yet entered this market

Performance of key bancassurance underwriters

Most ‘life insurance’ distributed by banks is actually creditor insurance

Protection-related life insurance

Insurance market size and growth

The value of the market for protection-related life insurance has fluctuated up and down in recent years

Distribution share of banks

Bancassurance provision rates, operating models and partnerships

Risk life insurance

Critical illness insurance

Income protection insurance

Accident and health insurance

Insurance market size and growth

Compulsory health insurance for government employees makes up the bulk of the market

Distribution share of banks

Bancassurance provision rates, operating models and partnerships

Accident insurance

Stand-alone accident cover (as opposed to creditor insurance) is not widely marketed by banks

Alfa-Bank distributes accident insurance with coverage options to suit different target customer groups

Probisenes Bank sells children’s insurance in addition to classic accident cover

Deposit balance protection insurance is not included in Finaccord’s analysis of accident insurance

Medical expenses insurance

Health / hospital cash plans

Performance of key bancassurance underwriters

Most ‘accident and health insurance’ distributed by banks is actually creditor insurance

Personal motor and household insurance

Insurance market size and growth

Personal motor insurance makes up over 95% of the combined total market

Distribution share of banks

Bancassurance is important as a distribution channel for both personal motor and household insurance

Bancassurance provision rates, operating models and partnerships

Personal motor insurance

Provision rates are high because car finance customers must also take out motor insurance

However, the supply structure is highly fragmented because most banks utilise multiple underwriters...

... meaning that the weighted share of partnerships of the market leader is less than 5%

Several banks possess captive underwriters that are active in this field...

... although most are utilised as one of a long list of accredited insurers

Just one joint venture underwriter is apparent in personal motor insurance in Russia

Household insurance

Household cover is available from almost all banks that are involved in mortgage lending...

... and is almost always bundled with creditor cover within mandatory mortgage-related policies

VSK is the leading provider in terms of its weighted share of partnerships

Banking institutions not offering household cover are mainly those not active in the mortgage market

Performance of key bancassurance underwriters

Bank-owned underwriters have gained market share in motor liability insurance...

... and have also performed strongly in property insurance

Non-captive underwriters secure the most motor insurance business from the bancassurance channel

Creditor insurance

Consumer lending market size and growth

Mortgage lending

Residential mortgage lending balances in Russia have increased only slightly since 2008

Non-mortgage lending

... with a similar assertion applying to non-mortgage consumer credit

Credit and other pay later cards

Credit and other pay later cards issued in Russia grew at a very robust rate between 2006 and 2010

Creditor insurance provision rates, operating models and partnerships

Creditor insurance linked to mortgages

In most cases, mortgage lenders source creditor insurance from a panel of approved underwriters...

... most of which are classifiable as non-captive providers

In addition to VSK, Rosgosstrakh, ROSNO and Cardif are identifiable as market leaders...

...with AlfaStrakhovanie featuring as the most prominent captive underwriter

A handful of banking institutions, including Probisenes Bank, work with a single underwriter...

... with a larger number opting for a hybrid operating model including both captive and non-captive insurers

Just one joint venture underwriter is apparent in mortgage-related creditor insurance in Russia

The Russian insurance sector was also experiencing some consolidation at the time of research

Typically, mortgage-related insurance in Russia is configured differently to other European countries...

... with mandatory mortgage insurance complemented increasingly by voluntary creditor insurance

Creditor insurance linked to consumer finance

The link with its parent company makes Russian Standard Strakhovanie a leader in this sector...

... followed by Cardif, VSK, Rosgosstrakh and ROSNO

Captive underwriters are comparatively prominent in the market for loan payment protection insurance

As for mortgage-related creditor insurance, Sberbank maintains links with four separate insurers

Underwriters with exclusive non-captive deals include Aviva, CiV Life, ERGO Russ and MetLife Alico

A third of entities offering consumer finance have no program for related creditor insurance

Creditor insurance linked to credit cards

Around one third of credit card issuers have developed an associated creditor insurance scheme

Russian Standard Bank uses its own captive underwriter for most of the credit cards that it issues

Creditor insurance risk coverage

Cover for temporary incapacity and unemployment is most commonly available to credit card customers

Alternative distribution channels

Creditor insurance market size, growth and forecast

Total gross written premiums could break through the EUR 1 billion barrier by 2015

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY

Overview of bancassurance provision rates for different types of insurance in Russia, 2011

1.0 INTRODUCTION

Banks and other lending institutions in Russia contacted by Finaccord, segmented by type

2.0 MARKET ANALYSIS

Gross written premiums for investment-related life insurance and retirement savings in Russia, 2006-2010

Gross written premiums for investment-related life insurance and retirement savings in Russia, 2006-2010 (data)

Bancassurance provision of investment-related life insurance in Russia, 2011: provision rate, operating models and weighted provider share of partnerships

Market share in total life insurance of key bancassurance underwriters in Russia, 2006-2010 (data)

Gross written premiums for protection-related life insurance in Russia, 2006-2010

Gross written premiums for protection-related life insurance in Russia, 2006-2010 (data)

Bancassurance provision of risk life insurance in Russia, 2011: provision rate, operating models and weighted provider share of partnerships

Gross written premiums for accident and health insurance in Russia, 2006-2010

Gross written premiums for accident and health insurance in Russia, 2006-2010 (data)

Bancassurance provision of accident insurance in Russia, 2011: provision rate, operating models and weighted provider share of partnerships

Market share in voluntary accident and health insurance of key bancassurance underwriters in Russia, 2006-2010 (data)

Gross written premiums for personal motor and household insurance in Russia, 2006-2010

Gross written premiums for personal motor and household insurance in Russia, 2006-2010 (data)

Bancassurance provision of personal motor insurance in Russia, 2011: provision rate, operating models and weighted provider share of partnerships

Bancassurance provision of household insurance in Russia, 2011: provision rate, operating models and weighted provider share of partnerships

Market share in total motor liability insurance of key bancassurance underwriters in Russia, 2006-2010 (data)

Market share in total property insurance of key bancassurance underwriters in Russia, 2006-2010 (data)

Residential mortgage lending balances outstanding in Russia (absolute and per capita), 2006-2010

Consumer non-mortgage lending balances outstanding in Russia (absolute and per capita), 2006-2010

Credit and other pay later cards issued and per capita in Russia, 2006-2010

Key data points for the consumer lending market in Russia, 2006-2010

Provision of creditor insurance linked to mortgages in Russia, 2011: provision rate, operating models and weighted provider share of partnerships

Provision of creditor insurance linked to consumer finance in Russia, 2011: provision rate, operating models and weighted provider share of partnerships

Provision of creditor insurance linked to credit cards in Russia, 2011: provision rate, operating models and weighted provider share of partnerships

Risk coverage of creditor insurance policies in Russia, segmented by type of underlying product, 2011

Creditor insurance gross written premiums in Russia, segmented by policy type, 2007, 2011 and 2015 (forecast)

Creditor insurance gross written premiums in Russia, segmented by cover type, 2007, 2011 and 2015 (forecast)

Creditor insurance gross written premiums in Russia segmented by policy and cover type, 2007, 2011 and 2015 (forecast) (data)

Note: Product cover images may vary from those shown

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