Press Release - JULY 02, 2019
Best’s Market Segment Report: Positive Momentum for Russia’s Insurance Market, but Threats Remain
FOR IMMEDIATE RELEASE
LONDON - JULY 02, 2019
The Best’s Market Segment Report, titled “Positive Momentum for Russia’s Insurance Market, but Threats Remain,” states that development of Russia’s insurance market has been tempered in recent years by geopolitical instability, economic stagnation and the weak performance of the compulsory motor third-party liability segment. At the same time, more stringent oversight from the country’s insurance regulator, the Central Bank of Russia (CBR), has led to a reduction in the number of market participants, as smaller (re)insurers have been unable to withstand the increase in regulatory scrutiny.
In 2018, the market’s total insurance premiums rose by approximately 16%, to RUB 1.48 trillion (USD 23 billion), according to the CBR. Notably, the uptick in gross written premiums was supported not just by growth in the life insurance business, but by higher income from non-life products as well. In terms of profitability, Russian insurers benefited from solid investment returns and improved combined ratios.
The report also notes that at year-end 2018, 199 insurers were operating in Russia, down from over 700 companies 10 years earlier. The number of participants has declined each year, as a result of higher regulatory capital requirements, more stringent regulatory oversight and the voluntary exit of some companies. As a result of tougher conditions and a number of mergers and acquisitions, the market has also become more concentrated.
Valeria Ermakova, senior financial analyst, said: “Russian insurance companies often pursue very different strategies in respect of capital management and risk tolerance, depending on size, business profile and management philosophy. However, as insurance regulation in Russia evolves, AM Best expects a greater focus on insurers’ capital adequacy to lead to further market consolidation and standardisation.”
Catherine Thomas, senior director, added: “Insurers will be affected by incremental increases in minimum paid-up capital requirements for different types of companies, but the more significant impact will be from the planned implementation of risk-oriented supervision by the CBR, including the introduction of risk-based solvency requirements and new enterprise risk management and governance standards.”
To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=287176 .
AM Best is a global rating agency and information provider with a unique focus on the insurance industry.