Stagnation of the insurance market in Russia will continue in 2018, excluding life insurance, premiums will grow by 2-3% maximum for the year, and the charges will not exceed RUB 1 trillion, as analysts of Expert RA predict. Taking into account the life insurance, premiums will grow by 9-10% - up to about RUB 1.4 trillion. This index is just slightly more than the expected results for 2017 (the Central Bank will publish the results of the insurers' work for the year at the end of February): according to the Expert RA’s forecasts, the fees for the previous year will be about RUB 1.3 trillion, and without life insurance – RUB 0, 97 trillion.
There are no sources of growth in the market, the authors of the survey believe. The economy is almost not growing, construction business, for example, is not growing and a breakthrough is not expected, and the growth of the insurance market is possible only with an increase in the number of insured facilities, agrees the General Director of Aliance Insurance Company, Nikolai Klekovkin.
The population's funds from bank deposits can be raised to investment insurance, says Klekovkin. But aggressive sales of the ILI bear risks for the insurance market, as analysts of Expert RA say, regulation of this segment of insurance will obviously be changed. Now the law does not oblige insurers to disclose earnings in ILI, and customers do not understand the essence of this product.
“If expectations regarding earnings [ILI] are not justified, this will cause unwillingness of customers to renew the ILI agreements, which may lead to a reduction of this market”, says Managing Director of Expert RA, Alexey Yanin. Risks can be realized already this year, he believes, and life insurance, in fact, is the only driver for insurers.
Combined personal insurance (benefit is paid under the risk of “survival” or “death”) will grow by 15%, insurance of borrowers - by 5-10%, as analysts of Expert RA believe. Premiums for voluntary health insurance (VHI), following rise in price of medicine, will grow by 6-8%. Insurance of citizens’ property will grow, as well, (11-13%): banks actively promote Fully Packaged Products (standard policies with a certain set of conditions and risks).
We mustn’t consider the VHI as a market driver, it is growing because of inflation, and its value (about RUB 150 billion in 2017) is not too large for affecting the entire market significantly, as Yanin says.
Growth of the market excluding life insurance can really be 2-3%, as Ilya Solomatin, deputy General Director of Ingosstrakh agrees with the forecast of Expert RA. But if the Central Bank liberalizes tariffs for third-party vehicle liability, then the market may grow by 5-7%, he believes.
“There are risks that the ILI might come back this year - time to pay to the customers of the promised earning will come. Many customers, who bought the ILI five years ago will now receive only invested money without earnings,” as Klekovkin believes. If customers discontented with profitability come, we shall forget about the growth during the last three years, Solomatin concerns.
The All-Russian Union of Insurers (ARUI) does not share the concerns. This segment will be a powerful driver of the market, it will grow by 50-55%, and the whole market this year - by 10-15%, the president of the ARUI, Igor Yurgens, is sure: “No skeptical forecasts regarding the above mentioned were justified. They predicted a wave of cancellations and complaints for the autumn of last year, but nothing global happened.” He believes that the flow of capital and premiums will be influenced by development of the national RNPK reinsurer: thanks to its creation, there was more than RUB 7.5 billion left in the domestic market by the end of 2017, this year it would be twice more.
Yurgens hopes for an Act on voluntary housing insurance against emergencies (the draft of it was adopted in the first reading in 2015): “We together with Expert RA estimated uninsured risks in quadrillion of rubles - these are 10 insurance markets in Russia. If even 1% of them manage to insure, it will become a powerful driver of the market.”
Analysts of ACRA agency predict that this year the market will grow by 10.8% including life insurance.
With an increase of 2-3%, the market will be consolidates, as Igor Ivanov, deputy General Director of RESO-Guarantee says. The insurers, he says, will continue to divide those lines of business from which Rosgosstrakh leaves; and the share of problem companies which survived in 2017 will be occupied by stable companies.