General Insurance Article - Sanctions compound underlying issues in Russian insurance


 Axco Insurance Information Services has released its latest report on the Russian insurance market, highlighting the impact that Western sanctions have had on an already fragile market. Although non-life premiums are predicted to grow 10% in 2014, this is primarily as a result of inflation and masks the inherent problems faced by the profession.

 Motor insurance is an area of particular concern; the average combined ratio for the market was close to 100% in 2013, but companies who relied on motor for over 50% of their premium income, recorded loss ratios of over 110%. With many Russians taking their insurance complaints to the courts in the expectation of payouts 50% higher than the norm, as well as a falling rouble increasing the cost of imported car parts, 2014 is likely see further deterioration.

 Following the annexation of Crimea in March 2014 and downing of flight MH17, the effects of western sanctions, which targeted 70 individuals and 20 companies with links to the Russian government, continue to be felt. The result has been a virtual halt in growth which, along with the threat of further sanctions, has made foreign investors wary and significantly tempered their enthusiasm for Russia as a target market for acquisitions.

 The main points of contact between the Russian and international insurance markets have traditionally been in marine, space, aviation and transport as the values involved are often very high and reinsurance is vital. The Russian fleet is sizeable and the source of important premium volume.

 Tim Yeates, Executive Director, Axco said: “It is clear that the Russian market faces significant challenges and its immense potential continues to be unfulfilled. Much will depend on geo-political factors but as economic prosperity and insurance awareness increase, a stronger insurance market will develop which should allow penetration to extend beyond Moscow and St Petersburg.”
  

Back to Index


Similar News to this Story

Sleighing the risks by giving Santa the insurance he needs
While you might be the most magical employer in the world, we know that even you aren’t immune to the risks of running a global delivery service! From
Diversity improving in insurance and long term savings
Key figures from the Association of British Insurers’ latest Diversity, Equity and Inclusion (DEI) data collection highlight the work of insurers and
Almost a third of homeowners have been victims of burglaries
Research commissioned by Co-op Insurance reveals that almost one in three (29%) homeowners have been the victims of theft from their home. The member-

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.