Overview of Insurance Market in Russia
Mazars' experts prepared a full annual "Overview of Insurance Market in Russia".
Overview of Insurance Market in Russia in 2014-2015
In Q1 2015 the Russian insurance market was hit hard by several negative factors at the same time. It is well known that insurance companies make money off major business investments and expensive consumer purchases. As a rule, major development projects aiming to create new production capacity and relying on borrowed funds have to be insured. However, late 2014 saw a drastic fall in the amount of loans issued to enterprises because of poor economic conditions, uncertainty in the business environment and the Bank of Russia sharply increasing its base interest rate. As real household income in Russia tumbled by 1.5% and real salaries plummeted by 8% it delivered another blow to insurance companies. Falling household income (in both high and low earning households) undermined the new cars market whose sales collapsed by more than 36%. As a result comprehensive car insurance premiums fell by 12% in Q1 2015, the collapse being partially cushioned by cars sold previously on credit for which premiums are still being paid today.
Nevertheless, the total number of insurance contracts fell only slightly: 31 million insurance contracts were signed in Q1 2015 with 28 million of them signed with individuals. Compare that with 32 million contracts signed in Q1 2014. Back then the number of contracts signed with individuals was also 28 million. Thus, what happened was that the amount of insurance contracts with companies fell sharply by 22% while the number of contracts signed with individuals remained roughly the same.
Life insurance market remains one of the few segments, which have been growing in recent years. The total amount of insurance premiums on life insurance contracts totaled RUR 23.4 billion in Q1 2015 with the share of life insurance in the total insurance market going up by 0.7 percentage points on the same period of 2014 and reaching 8.8%.