How does public's confidence in market and insurance products affect it? In your view, has the culture of consumption of such products been formed in the country yet?
Sergei Tsikalyuk: I think that culture has been formed in those segments where people saw the result. Currently, such types as overseas travel insurance, optional medical insurance (our portfolio has doubled since the beginning of the year), insurance against accidents and even bite of encephalitic tick are in demand. So, people believe in insurance protection and are ready to pay for it.
As to the image of insurance companies, like I said, it remains low. Not least because we do not talk much about real help to our clients. And sometimes the position of some banks that strictly impose insurance services on borrowers of consumer credits works against us. Besides, we do not earn money from such insurance, so even insurance as such basically starts to cause rejection among the population.
That being said, trends in the development of voluntary insurance types meaning that a person decides himself to insure their own risks suggest that people, hence the market will develop.
The fastest growing segment is life insurance. However, here too there may be problems: with the first payments people may be dissatisfied with received income. What risks do you see in the development of the segment?
Sergei Tsikalyuk: Market development may endanger too large appetites of some banks selling investment life insurance. Their agency fee can go up to 9-12 percent, while the insurance company earns 1-2 percent. Accordingly, the higher the commission of the bank, the lower the investment income of the client. “Greed” should not fail market participants, you need to look at the future - not 3 to 5, but 10 to 15 years ahead. The position of ARIA is also important here - we support standards for insurance operations and standards for protecting the rights of beneficiaries of insurer services that have been prepared and sent to CB of RF for approval.
Another segment that deserves special attention is cash-value life insurance. For its active development it is necessary to equalize the bar of tax deduction on the premium paid life insurance policy (now 120,000 rubles) with investment accounts (400,000 rubles) as well as introduce a uniform tax regime for NPFs and life insurers. Back in 2000, international consultancies estimated the capacity of life insurance market at $30 billion per year. With average contract duration of 7-12 years, insurers could attract tens of billions of dollars in investments into the economy. In addition, we can provide the population with an understandable and efficient financial tool for accumulating family funds, literally for every occasion in life. In my opinion, this is a highly promising and important task and there’s much yet to do for all market participants.
In your opinion what is the potential of the online sales segment in insurance? Today, it accounts for less than 5 percent, can the situation change radically in the coming years?
Sergei Tsikalyuk: In my opinion, the prospects are the most serious. The active introduction of remote services in customer relationships has become an indispensable trend in market development and the insurance segment is no exception. Therefore, we, of course, actively develop online sales in the company. Even now we have a mobile application - so far only for employees of enterprises with whom we work. Next we plan to bring it to the retail market.
I believe that in the next 5-7 years the share of remote services in insurance will be 50 percent. Today this is a need of the population, people are ready for this. Here, of course, there will be fierce competition between insurance companies. But I like that the person himself will make a choice, determine the criteria, and in the first place, certainly he will not have the price, but the technology, service component and reliability of the insurer.
What are your forecasts for the development of the insurance market in general?
Sergei Tsikalyuk: Most often, me and my colleagues in the market hear this question. But I have never heard them asking: “What have you done to develop the market?”. As you know, growth can only be where you plant the seeds. In this regard, I believe that difficult period is going to happen to the market, since little has been done for its development over the past five years. No new segments appeared, and the old ones left, the market is shrinking, there is fierce competition between insurers. Companies are protecting their own interests in a targeted way instead of joining forces to form a serious lobby in order to develop the market, increase its profitability and seek opportunities for growth. We are focused on a different thing and lose to other markets. But only we can help ourselves - myself, my fellow shareholders, top managers of insurance companies. We need to seriously analyze what we have lost over the years and for what reasons and decide who and how will create a new one.