The Russian insurance market will expand by 10.5% in 2018, with the annual growth accelerating further to between 11% and 14% in the medium term, Russia's Analytical Credit Rating Agency said May 21, estimating the total value of collected insurance premiums at almost 2.3 trillion Russian rubles in 2022.
The rating agency expects the insurance market will continue to outperform Russia's GDP growth rate by 4% to 8%, and sees the market growth as positive for credit profiles of local insurers, although risks in certain segments could undermine the positive trend, it warned.
After a boom seen in 2016 and 2017, growth in the life insurance segment is expected to slow down to 29% in 2018, according to ACRA, which believes that life insurance products will retain their popularity in the medium term, but it will be impossible to maintain the current growth rates.
The Russian auto hull segment is expected to show growth for the first time since 2014 thanks to the expected recovery in demand for cars, while the average insurance premium will stop declining in 2018, ACRA also said.
Meanwhile, the obligatory motor third-party liability insurance and health insurance segments could be significantly affected by planned reforms, the framework of which is still unclear. No changes are therefore expected in the current trends in these segments before 2019, the agency said.
ACRA does not see any significant factors that could speed up growth in the corporate property insurance segment, which has been lagging behind the market average in recent years due to gradually decreasing tariffs. If the current trend persists, the segment's insurance premiums will stabilize at around 100 billion rubles per year, the rating agency said.
The Russian accident insurance segment has been demonstrating fast growth, fueled by lending to individuals. ACRA expects the current trend to continue, with the aggregate insurance premium to exceed 200 billion rubles in 2022.
The household property insurance segment has also shown high growth rates, and the adoption of home insurance law could stimulate the growth further, ACRA said.
The overall growth potential for the Russian insurance sector is high, and is estimated by the agency at between 100% and 200% of the current level. ACRA said, however, that conditions for the development of the Russian insurance industry will have to change in order to fully unlock this growth potential.
As of May 22, US$1 was equivalent to 61.07 Russian rubles.