Insurance premiums over 9 months exceed 1.1 trillion rubles

In 2019 Q3, the amount of insurance premiums remained unchanged as compared to the same quarter last year, totalling 362.1 billion rubles.  Annual growth of the insurance market was close to zero, dragged down by the persisting decline in investment life insurance (ILI). These are the findings given in the Review of Key Indicators of Insurers.

Photo: Zuma / TASS

Factoring out life insurance premiums (except borrowers’ life insurance), the insurance market expanded by 8.7% year-over-year in Q3, driven by voluntary health insurance (VHI), borrowers’ credit insurance and fully comprehensive car insurance that resumed its growth. Quarterly growth rates of VHI premiums were the highest on record, reaching 35.1% YoY as a result of an increased average premium.

Over the first 9 months of 2019, insurance premiums exceeded 1.1 trillion rubles (+0.7% YoY).

Further dynamics in the insurance market will largely depend on the current interest in personal insurance demonstrated by the insured and insurers. Besides the promotion of specialised VHI plans, insurers are improving their endowment life insurance programmes, which includes adding various options, e.g. critical disease diagnosis and telemedicine services. As medical technologies and services enhance, they may become a long-term market driver for insurance products at the intersection of the VHI and life insurance segments.

Changes in the market structure and insurers’ attempts to strengthen their positions in growing segments entailed a significant increase in intermediaries’ fees (+3.6 pp over the year, up to 29.3% of the premiums received through intermediaries). One-half of the overall remuneration was accounted for by credit insurance. Of this sum, banks’ earnings from fees reached 84.9%.

As a result of a rise in fees, the ratio of administrative expenses was up to 38.9%, which affected Russian insurers’ combined loss ratio hitting 86.9%. Despite higher losses, insurers’ profitability improved (to reach 30.9%), supported by increased investment income. The latter was associated with growth in the bond market as insurers expanded their investments in corporate and governmental debt instruments.

In 2019 Q3, total insurance payments were up to 11.1% YoY with nearly one-fourth of them being accounted for by life insurance. Payments in this segment almost doubled, pushed up by the completion of the earlier signed ILI agreements. ILI payments will likely continue to go up in the next quarters.

As of the end of September 2019, insurance reserves exceeded 2 trillion rubles (+15.7% YoY). Reserves under life insurance agreements accounted for almost 52% of this amount. Insurers’ profit for the first 9 months of 2019 totalled 150.4 billion rubles, which is 10.2% more than in the same period last year.

6 December 2019

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