The future of the Russian insurance market is an expert opinion

Insurance Market: Results 2021 and Forecast for 2022

2021 is already gradually coming to an end, so we decided to talk to Do. E., Ph.D., Professor of the Financial University under the Government of the Russian Federation, Alexei Nikolayevich Zubets, concerning the results of the outgoing year. We also asked the expert, what changes in the insurance market could be expected in the coming 2022 year.

The future of the Russian insurance market is an expert opinion

– Alexey Nikolaevich, good afternoon! We thank you that you again agreed to meet and share your expert opinion with us and our readers. It took 2 years since the beginning of the pandemic, and is nearing the end of 2021. Today we would like to ask can how you would mark the current year, and in addition what was really new and important for the market. Also, in the insurance environment transformation is talked about a lot, just what is it?

  • The increase in the share of the Internet in sales.
  • Reduction in customization and the transition to the “typical tailoring” of insurance products which facilitates sales due to the possibility of the formation of “boxed” proposals and reduction in the quality of the preparation by sales personnel.
  • Working with big data, which allows you to more accurately set tariffs for each specific consumer in automatic mode.
  • We saw that banks were not all complaints and could not keep the entire market to themselves, much as they try, there was always a place on the market for direct sales by traditional insurers.
  • The relative decline in interest in insurance. And this is normal – insurance is not a service of finite consumption, such as a tourist trip. This is an intermediate stage, a technical service that is a condition of the acquisition of various goods. Accordingly, the ratio of insurance becomes calmer and neutral, to a certain extent customers become From which, by the way, emerges the impossibility of promoting an insurance brand in the market based on emotional arguments. Insurance consumers are focused on the price of the product and the company’s reliability – the probability of non-fulfillment by the insurer of their obligations. Therefore, aggregators and ratings of the business reputation of insurers become the main tools for promotion.
  • Everything concerning life insurance is definitely becoming of interest to the audience up to 45 years of age
  • The share of VMI and private clinics in the general expenditure of the population and the state on medicine is growing and nothing can be done about this. Moreover, in the directions of interaction between VMI, paid medicine and public health care, it is necessary to look for a compromise version of the construction of medicine in Russia.

– Will the Internet market of insurance be growing, how fast and what kinds?

According to our online sales estimates, they will grow to become in the lead. So, if in one square meter of sales in 2014 the Internet accounted for 0.15% of premiums, then two square meters in 2021 is 7.57% of premiums – many multiples growth in 7 years. With regards to third party liability insurance, the result is fantastic – sales via the Internet in the 2nd quarter equated to 31% of premiums! I think that we will see the best results in sales through the Internet in typical inexpensive products – such as insurance of traveling abroad, third party liability insurance, and insurance of apartments.

– Will there be a role for insurers in the market in the next 5 years? Whose share will be the greatest: banking groups and aggregators, or mono insurers?

I think there will be enough places for all in the market. Indeed, as I said, aggregators are becoming increasingly important tools for market promotion. This is true. On the other hand, banking groups, it seems to me, have already exhausted reserves of explosive growth in the main. In the second quarter of 2018, the share of banks in premiums was 37%, in the second quarter of 2021 – 39% – practically no growth. At the same time, it should be remembered that full, customized insurance, combining the balance of interests of the insured and the insurer is usually a complex product, so that classical insurers, including mono insurers, will not go anywhere.

– On what indicators, in your opinion, does the growth of the insurance market depend?

According to the Bank of Russia, in the first half of this year, insurance premiums increased by 21% against the same period last year, and the number of contracts concluded increased by 23.6%. It is obvious that the growth of the insurance market is largely explained by the effect of a low base – the modest indicators of the first half of 2020 against the background of a rigid location and quarantine. Nevertheless, despite the fluctuations of the Russian economy – a deep economic crisis and the faster recovery that followed this, for the sum of the last two years, the insurance market has developed faster than the economy as a whole. If, in the first half of 2019, insurance premiums accounted for 1.4% of GDP, then in the first half of 2020 – they already achieved 1.5% and 1.6% for the first 6 months of this year. These figures, although they are minor, mean an increase in the weight of insurance in the country’s economy. At the end of the 1st half of the year in Russia, 135.2 million insurance agreements operated. Studies show that 72% of families in Russia have at least one insurance policy compared with 69% two years ago.

If we talk about the prospect of the development of the insurance market, then, in our opinion, the demand of the population and business for insurance services will continue at a high level until the end of this year and in 2022. Calculations show that consumer demand for insurance policies will rise in 2022 by at least 17% (according to the number of insurance policies sold).

The growth of the insurance market will be based on an increase in GDP, the growth of which in 2022, according to our forecasts, could be 3-4%. Real wages will grow at a comparable pace or even faster: calculations show that the growth of real salaries in 2022 may exceed 5%.

Life insurance, according to our estimates, is expected to reduce growth rates. If in 1st half of 2021 in this market, the growth of premiums amounted to 31.4%, and the increase in the number of contracts was 39.4%, then in 2022, according to our estimates, the growth of the market will be about 16%.

On the other hand, the demand of the population and enterprises on the VMI in 2022 will remain sustainable. As a result of the first half of 2021, the awards in this market increased by 8.9%, the number of concluded agreements by 9.3%. In 2022, we expect the growth of the VMI market to be at least 12-14%.

In the fully comprehensive insurance market of vehicles in the first half of the year, the growth of the premium amounted to 23.4%, and the increase in the number of contracts was 4.4%. According to our estimates, the car market will continue to “cool” and in 2022 the increase in the number of contracts sold may stop or drop to the zero mark. The fact is that the demand for new cars since July has already fallen below the level of last year. The demand for used cars is still at a level not lower than last year’s indicators, but it is possible that for this segment it will drop into a negative area.

On the market of other insurance of property by individuals which is made up mainly of the insurance of real estate, the growth for 6 months amounted to 18.2% and the increase in the number of contracts is 9.6%. According to our estimates, on the background of a boom in the real estate market, the demand for insurance of apartments will remain at a high level. In 2022, we expect the growth of the apartment insurance market to be at least 12%. Even higher, according to our estimates, will be the increase in the market for suburban real estate insurance. This market may increase by 18-20% next year.

Well, it is difficult to predict for 5 years, and it all depends on the growth rate of the wealth of individuals. On the other hand, it can be assumed that the fully comprehensive insurance market and the third-party liability insurance will mainly stagnate, the real estate insurance market – growth average rates, and the VMI and life sectors will develop faster than the market.

– What will happen to the accumulative pension?

Today, a very small number of families, just a few percent, have independently formed accumulations in pension funds. But the potential for the development of voluntary pension insurance is simply huge. Preparing for a secure old age has become one of the main concerns of Russians. Business insurers and the National Pension Fund must offer Russian investment programs with high levels of protection against inflation and loss of money due to crises – for example, in tools whose value and yield is tied to inflation, in gold, or mutual investment funds in immovable property.

– The necessary unification of the Central Bank of Insurance is it still good or is it evil?

The unification of insurance rules is a way to protect the insurers from unfair insurers. On the other hand, it is quite obvious that the unification of the rules will bring competition between insurers to the two parameters already mentioned – the price and reputation of the company in terms of the quality of service and payments. So the competition will move to client service – the convenience of using insurance services, the speed of reaction to the needs of the client, the convenience of the insurer’s website, etc.

– Why does the Cyber insurance market in Russia still not develop?

Probably because Cyber risks do not represent in themselves a significant threat to Russian business and the loss from them is small. As the size of the loss increases, the demand for Cyber insurance will grow.

– Will Telemedicine in Russia be as in the West – a fully-fledged service?

Yes, of course, telemedicine in Russia has a practically limitless future, given the size of our country. I have a suspicion that very soon telemedicine will become one of the foundations of Russian medicine as a whole. At the same time, the monopoly on telemedicine will not be able to preserve the insurers – it will be used by state, and private medical institutions.

Alexey Nikolaevich, on behalf of the team of, thank you for devoting time to us and sharing interesting answers to the future of the Russian insurance market!


Correspondent Sergey N. Especially for Calmins.comАвтор статьи Calmins: Сергей Н. ©

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