According to the Central Bank, the consequences of the current economic situation for the insurance industry would be different from what happened, for example, in 2014-2015. The insurance market has changed since, in particular, over five years, the share of outbound trips, as well as life and health insurance of borrowers, increased in the contribution structure, the regulator explains.
As a result, the Central Bank expects a more noticeable decrease in the volume of insurance premiums on travel insurance and credit life insurance. The Bank of Russia, however, notes that the life insurance dynamics will largely depend on the development of long-term insurance programs. Social distancing will have a deterrent effect on the volume of motor insurance premiums as well in the second quarter, according to the Central Bank’s expectations. In this case, third party liability being mandatory will play a stabilizing role.
The pandemic will also affect voluntary life insurance (VHI), the review notes. “The decrease in incomes and optimization of expenses of enterprises and individuals, as well as cessation of activities of some SMEs, who have started to show demand for cheaper VHI policies, will have a negative impact on the segment dynamics,” the Central Bank explains.
Along with this, the current economic shock has positive aspects as well, for example, the acceleration of digitalization, the Central Bank notes.
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