Insurance market growth supported by credit insurance and voluntary health insurance

Insurance premium growth accelerated to reach 1.8% in 2019 Q2 as compared to 0.3% in 2019 Q1. Yet, this is far behind the pace recorded in 2018 (7.5%). Personal insurance products were the major contributors to the growth, according to the Review of Insurers’ Key Indicators  for 2019 Q2.

During 2019 H1, insurance premiums were up by 1% as compared to the same period last year and totalled 739.3 billion rubles. Payouts under insurance contracts increased by 21.1% to 285.6 billion rubles. These are the findings of the statistics on insurers’ performance published on the Bank of Russia website.

High demand for consumer loans was the main driver of a substantial rise in borrowers’ life insurance and accident and health insurance. The amount of insurance premiums in these segments increased by 16.7 billion rubles, and the aggregate insurance market growth reached 6.3 billion rubles in 2019 Q2 as compared to the same period of the previous year.

Voluntary health insurance (VHI) largely contributed to the insurance market growth. In 2019 Q2, insurance premium increase in this segment sped up to 19.6% YoY, which is the highest reading over the last 6.5 years. This trend is explained by the promotion of severe disease protection programmes and inexpensive health control programmes, as well as by a growing demand for franchise insurance policies and telemedicine services. Further development of VHI and endowment life insurance can become a growth source for the insurance market.

Life insurance premiums, excluding borrowers’ life insurance and pension insurance (which also comprises investment life insurance), declined in 2019 Q2 by 22.8% YoY. This could be caused by the fact that clients were dissatisfied with yields on expired insurance contracts and that they have become better informed of the specifics of investment life insurance products. At the same time, payments in this segment considerably increased by 87.1% (to 25.5 billion rubles) as compared to the same period last year. This was associated with the expiry of previously concluded 3–5 year contracts (this insurance segment has been rapidly evolving since 2015). Payouts in investment life insurance will continue to rise in the coming years as policies purchased during the market surge expire.

As of the end of 2019, insurers’ overall assets grew by 14.7%, having exceeded 3.1 trillion rubles. The assets to GDP ratio was 2.88%. As of the end of 2019 H1, insurers’ profit before tax increased by 11.4% to 123 billion rubles.