What awaits the insurance market in Russia in 2021-2023

Interview with an interview with the expert of the insurance market of the Russian Federation – General Director of LLC “Insurance Broker “RT-Insurance” Nikolai Galushin

In 2020, the Insurance Broker RT-Insurance celebrated its 10th anniversary. The year 2021 was marked by the fact that the Board of the State Corporation “Rostech” on March 20, 2020 decided to create a society of mutual insurance, which we previously told in the article.

In this regard, we decided to talk and discuss the prospects for the development of RT-Insurance, regarding the new direction – mutual insurance societies and the entire market as a whole with the General Director of the Sat “Insurance Broker “RT-Insurance” Nikolai Galushin.

What awaits the insurance market in Russia in 2021-2023

– Nikolai, good afternoon! Thank you for participating in an interview in our information and analytical resource Calmins.com. Since not all readers know what RT insurance represents, we want to ask you to tell us more detailed: what is it, the results and prospects.

– Good afternoon! Let’s start in the right order. The insurance broker is a 100% infrastructure subsidiary of the State Corporation Rostech and the Center for Insurance Corporation. RT-Insurance acts as a procurement organizer for all types of insurance for enterprises of State Company “Rostech”, provides methodological support to enterprises for the formation of insurance programs, accompanies the settlement of insurance claims, the broker is involved in the process of coordination.

Broker revenue is about 500 million rubles per year.

There are about 50 employees in the broker and many of them have a lot of work experience in leading insurance companies, and directly in the RT-Insurance.

– As far as we understood, the RT-Insurance is the center of the Insurance Competences in GK Rostech. But what is the main task of a broker?

– Perhaps, it is even a set of tasks:

  • to form systemic approaches to ensuring the protection of enterprises’ interests,
  • identify the sufficiently necessary budget for insurance costs,
  • preparation of a set of documents for procurement, and first of all, the project of the insurance contract that will be concluded with the winner of the purchase according to its results,
  • provide support for the insurance contract during the entire period of its validity, and
  • assist in the prompt settlement of losses, controlling the completeness and timeliness of payments.

The broker is also engaged in the placement of risks on concluded reinsurance agreements. Keeping a client (organization of State corporation “Rostech”) and interaction with partners (insurers and reinsurers) at all stages of the insurance contract.

– Nikolay, quite recently, we covered the news that the State Corporation of Rostech decided to establish a mutual insurance society. What is the role of RT insurance in this process.

– Currently, after the establishment and launch of the society of Rosteh mutual insurance, RT-insurance staff is involved in the work of mutual insurance society. As I said earlier, many of our employees are highly qualified specialists who have a lot of experience in the insurance market and in leading insurers. The RT-Insurance has adopted a strategy aimed at increasing services for Rostech enterprises, as well as to stimulate the growth of the amount of insurance types, which are purchased by Rostech enterprises, with the optimal budget of the costs of the specified goals.

– Please tell us about the main activities of mutual insurance society. What types are planned to be localized in this company: property insurance, responsibility or VHI?

– mutual insurance society Rosteh is currently carrying out one type of insurance is insurance of property of enterprises mutual insurance society members. The plan is to diversify the types of insurance, a wider product line to achieve a more balanced insurance portfolio. Now the law regulating the activities of the mutual insurance society is prohibited by their personal types of insurance. When making a new version of the law, which currently undergoes a discussion, it is planned to withdraw this restriction and restriction on the maximum number of parties of           mutual insurance society. When the restriction is removed, we plan to carry out operations on insurance of employees of organizations – members of        mutual insurance society from accidents.

– Nikolai, perhaps, an important issue for our readers and the professional insurance community is the market and forecasts. What could you tell?

– I built a forecast for 2020 with a decline in fees by 5%, assuming that two factors would act: a pandemic began in the second quarter, when many insurance contracts had already begun and when the budgets at 2020 were sprocket, part of the contracts for the second half of 2020 was concluded. That is, the decrease would have occurred in a larger volume if the pandemic covered the entire calendar year.

The reduction in the amount of insurance premiums was due to the usual reaction to crisis situations in our country – savings on costs, and insurance is increasing. On the other hand, the second factor is the inertness of the consequences of crisis situations for the Russian insurance market. If we appeal to the history, then significant reduction in the volume of fees the Russian insurance market has been experiencing not in the year of the crisis, but in the next 2-3 years.

However, there can be no direct analogies here, because over the past decade the market has changed very much. In 2005, the Central Bank published a report on the Russian insurance market, recognizing that almost all fees for life insurance in the country have no relation to insurance. Already in 2005, tighten the rules, the regulator has achieved that the fake insurance market dropped significantly.

Now the bank insurance segment is so large that it largely compensates for the loss of the market as a result of measures for Cost Cutting. As a result, the market last year grew, my personal forecasts were not justified – I thought about the market more conservatively.

What awaits the insurance market in Russia in 2021-2023

– Thank you for such a frank answer – not every expert is ready to admit that was mistaken in forecasts. It is worth a lot. On the other hand, the forecasts of many experts were constantly corrected, and if they recall the initial fears, the market was afraid of falling up to 15%. Let us now discuss the present – 2021.

– This year the market is growing, and this also does not confirm the theory of inertia of crisis consequences for the insurance market. Significantly growing a bank insurance segment, life insurance.

In general, no breakthrough discoveries on the market occurs, and in corporate insurance, many years of raising trend has changed a more stringent approach to underwriting, the risks rate fixing, difficulties with the placement of major risks in reinsurance, especially in certain segments. The main efforts of the market will be done in the field of presence in the retail segment.

The digitalization trend, which many spoke about during the decade, began to be inevitable in the conditions of last year’s lock-down, caused by Covid. And according to my estimates, the digitalization of companies will be focused on further optimizing business processes, which should reduce the cost of managing business, as well as improve customer service, reduce the number of manual operations and avoid situations with internal fraud.

The second direction is focused on building client services, digitalization of sales channels, including work with its own branches and agent networks. I believe that from the point of view of sales in mass segments, we are in the medium term, in general, the maximum distance between the buyer and the seller is. The entire sales mechanism, decision-making, loss and cross-sales will be shifted to the area This in turn will lead to the emergence of new frames with new competencies, in mobility of decision-making and their implementation, as well as, including due to pandemic, will lead to a reduction in personnel, presence, offices and offices etc. But it will contribute to the emergence, development of new sales channels, information report channels built into other services insurance coverages, etc.

– Nikolay, and yet what is your market forecast in 2021?

 I can make a forecast that I hope this time will be true – the market will grow in volume. The growth rate to predict is no longer afraid, including for the reason that, despite the actions of the regulator, the life insurance market, as the largest segment of the insurance market, began to grow rapidly. And from life, corporate / collective accident insurance, VHI, the market situation depends on the market.

In addition to the insurance of life that is sold through banks, only products that will also stand on bank shelves can create significant volumes. Including new products that will not be able to be sold through agency networks or branches of companies, such as Cyberrisks insurance, ecological risks insurance e.t.c.

I don’t see any new players who can create new niches, products and disruptive measures. Excluding banking solutions.

In my opinion, an average of 5-10% market growth is possible.

In general, we see the increase in the cost of insurance in many key areas. This means that even with a decrease in the number of contracts of insurance contracts, the market can demonstrate growth. But, of course, I want the other – I want to hope that the market as a whole can show 20-40% of the growth rate ever. Now there is no reason for this.

What awaits the insurance market in Russia in 2021-2023

– We discussed the insurance market, and whether the insurance brokers market in the Russian Federation, which we only have about 70 companies with the license of the Central Bank of the Russian Federation?

– The presence of brokers will not undergo any significant changes. Brokers are mainly present in the corporate insurance segment, they will remain here. Insurance brokers are the necessary corporate insurance link, because they are guarding the interests of customers and provide support and resolving disputes for customers with insurers.

– And what role in the market can play the society of mutual insurance, will the so many of such organizations appear after Rosteh?

– the mutual insurance society that appeared during the 2020-2021 will not change the placement of forces in the market, and the conditions of the existence and the emergence of new society of mutual insurance will be only niches that are not needed or not available to commercial insurers. As for the appearance of society of mutual insurance within the framework of other state corporations, I do not judge, however, this option is not excluded.

– And the last question: will the insurance market be changed due to the possibility of coming direct branches of foreign insurers, will the insurance landscape and players change?

– In my opinion, all foreign insurers who wanted to designate their presence in the Russian market already are here. Russia’s accession to the WTO and the removal of restrictions on the admission of branches of foreign insurers (that Russia had to adopt within the framework of fulfillment of the conditions for accession to the WTO) will not lead to what we should expect (that the market will appear new names). Requirements for branches of foreign insurers, an existing quota, a general attitude to the market by foreign partners, sanction regime against Russia – will not help the emergence of new names.

And in general, on the market, summer heat, calm and silence.

Wellaway …

Nikolai, on behalf of the editorial board of information and analytical resource Calmins.com – deliberate insurance, we want to thank you for your time and an interesting conversation. We will be glad to see you again!

More interesting forecasts and market tests in the interviews with experts and market analysis!

Calmins.com ©

 

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