Insurance market of Russia 2021: Let’s say “no” to Pandemic

“Expert RA” held a conference “Russian Insurance Market: Contrary to Pandemic”

On June 9, 2021, a large meeting of professionals in the insurance industry (conducted by the rating agency) took place in Moscow. The topic of the conference is “Russian Insurance Market: Contrary to Pandemic.” Representatives of the Bank of Russia, All-Russian Insurance Association, heads of insurance companies, experts, representatives of the info-media came to the event.

At the conference the participants discussed with Expert RA the situation and brief results of 2020, as well as the current trends of 2021, and gave their forecasts.

The results of the insurance market in Russia 2020

Igor Yurgens – President of the All-Russian Insurance Association and Russian Association of Motor Insurers opened the conference. He noted that the insurance market in Russia successfully passed the pandemic 2020 year, and the negative forecasts of some analysts about the fall in the insurance market by 30% were not justified last year.

The President of the All-Russian Insurance Association noted the role of the regulator and its high concern about consumer satisfaction and increasing the regulation of this area, especially with regard to life insurance, although the level of complaints does not exceed 0.3%.

Insurance market of Russia 2021: Let's say no to Pandemic

  • Digitalization, according to him, gave birth to a new religion – Sustainable ESG development. What seemed exotic, becomes a tool for regulating the market at West and as well becoming important in Russia.

First Deputy General Director Expert RA Chekurova Marina Viktorovna noted that the rating agency is already actively working in this direction and follows all new trends and market challenges.

Alexey Yanin, Managing Director for Insurance and Investment Rating “Expert RA”, said that the Agency conducted a survey of insurance companies, and turned out to be interesting statistics, as the insurance market survived the Pandemic 2020:

  • 63% of companies
  • 15% – go well,
  • 15% – significantly felt the impact of the pandemic, but have already recovered,
  • 7% – did not reach pre-crisis levels.

How the crisis affected the profitability of the business (profits gross):

  • 25% have grown
  • 41% – decreased
  • 48% – no changes.

Alexey also noted that 58% of companies were preparing anti-crisis plans (transition to remote work, etc.), but unfavorable predictions were not justified. 80% and more employees were translated into “remote” in more than 70% of companies, and 86% of companies were able to transfer to remote work less than in 2 weeks.

The conference noted that the Coronavirus pandemic was a catalyst for the digitalization of the insurance market:

  • the availability of insurance services increased, regardless of the location of the client, client-oriented client-oriented,
  • new risks appeared (Cyber security for companies, work loses for clients, mortgage risks e.t.c.),
  • new products appeared – anti-coronavirus insurance.

The insurance market overcame the pandemic successfully, quickly established remote communication channels with the client, reduced costs, the volume of fees was restored in the second half of 2020

Alexei Yanin noted that the main challenges of the insurance market in 2021 are:

  • an increase in loss,
  • reduction of investment income,
  • new solvency requirements (710-p),
  • New rules on realization of Investment life insurance and accumulative life insurance (active struggle with misseling).

The expected forecast for the insurance market from the expert RA: 

  • In general, an increase of 8-9% in 2021,
  • growth in the market “not-life” – 2-3%.

Mikhail Mamut (Bank of Russia), noted that a document was developed, which regulates two points:

  • Retail investors – a testing mechanism,
  • And for the market there are rules for sales (including the suspension of sales of “toxic” tools and even feedback.

He also noted the growth of complaints from consumers when selling insurance products (especially Investment life insurance), as well as for payments. The representative of the Bank of Russia drew the attention of the market and insurers to the need to considerably refer to the sale and loss settling.

Insurance market of Russia 2021: Let's say no to Pandemic

Victor Dubrovin, Vice-President of the All-Russian Insurance Association talked about interesting drivers and market challenges.

The most susceptible to the risk of the industry: tourism, transport, agrarian sector. The economy went towards the low-carbon (green) economy – risks may appear and such companies need to offer appropriate protection. Many international insurers have already chosen the path of the “green economy” and refused to insure this direction. It also affects the assessment of the industry for investment attractiveness, and is also important to manage new risks.

An important driver is the task of the President of the Russian Federation to enter the average life expectancy by 2030 to 78 years, however, for 2010 this figure in Russia was 68 years. Demographics in Russia is not yet improved, and this can lead to an increase in the load on social, medical and pension projects. Savings have about 15% of citizens, so risks arise – how to live people to pensions. Already, the needs of social pensions and cumulative programs are growing.

Cyber risks are a serious threat, and this question requires a study in the near future.

The heads of insurance companies also appeared with speech. They noted the situation in the market in 2020 and the current year, told about challenges to companies, as they could overcome the crisis and a pandemic, as well as about the trends of the insurance market in the coming

Summary

The Russian insurance market has not only overcome the coronavirus pandemic and denied the negative forecasts for his fall in 2020, but also went to the growth. Such position predicted the All-Russian Insurance Association, the president of All-Russian Insurance Association Igor Jurgens (in his exclusive interview for our source), Expert RA (according to analysts) growth up to 9%.was expected during the current year

Earlier on our resource in the author’s analytics from our expert D.Sc. Economics., Ph.D., Professor of the Financial University under the Government of the Russian Federation, Zubets A.N. and Article Russians continue to actively buy insurance in 2021, we told you about the results of 2020 and first positive signs for renewal for decrease of the economics in 2021.

More recently, we have published the first results for the 1st quarter of 2021 according to the Bank of Russia in the article by the results of the insurance market of 2021: briefly about the main, where they stopped on the main indicators and clearly showed what happens on the domestic insurance field. The market grew by 8% in relation to the 1st quarter of 2020, and growth is celebrated in almost all areas of business (except for the property of legal entities).

Forecast of the insurance market in Russia this year from the Expert RA: 

  • In general, an increase of 8-9% in 2021,
  • growth in the “not-life” market – 2-3%

For more information and analytics, read in our articles in the market analysis.

The most recent information about the news of insurance and market, insurance today and tomorrow at the information and analytical resource – Calmins.com – deliberate insurance!

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