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Russia Insurance Report Q1 2012
Business Monitor International, Dec 2011, Pages: 85
Business Monitor International's Russia Insurance Report 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 its peers in other countries in the region. It is also growing rapidly and data published by the Federal Service for Insurance Supervision (FSIS) in late 2011 showed total premiums in H111 were about 19% higher than in H110.
Double-digit growth was achieved in most of the major lines. The rapid growth, combined with the regulator’s higher requirements for capital, mean that the sector will need an estimated RUB50bn in new funding prior to early 2012. As rules stand, this money cannot come from multi-nationals, because foreigners now account for 25% – the limit – of the aggregate capital of the insurance sector.
Meanwhile, there is a frenzy of deal-making underway. In some cases, local companies are pursuing niche opportunities. In others, they are seeking to combine two (or more) previously separate subsidiaries.
Some deals involve foreigners taking stakes in smaller established players. One or two deals involve bancassurance opportunities. Given the peculiar structure of the Russian insurance sector, most of the activity is occurring in the non-life segment. However, it appears that Sberbank is looking to boost its ability to distribute life insurance products through its enormous branch network.
The figures that are available to us suggest that much of the growth is coming from the overall growth of the economy. In the life segment, there may well be a sharp increase in the number of first-time users of life insurance, although we want to see the final Q311 figures of the regulator before venturing a firm view on this. Aside from the dealmaking and the general increase in premiums, though, it is not clear that many the leading players are focusing on profitability (through control of claims and other costs), brand development or innovative products. In most respects, the market remains very underdeveloped.
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