Boston, MA -- (SBWIRE) -- 01/24/2013 -- The Russia Insurance Report considers the prospects for both life and non-life (including Compulsory Medical Expenses Insurance - CMEI) insurers in that country. At first glance, the prospects appear quite exciting. By any standard, the Russian non-life segment is both large and rapidly growing. According to the Federal Financial Markets Service (FFMS), premiums increased by about one fifth in H112 relative to the previous corresponding period. Life premiums are surging - if from very low levels. The regulator has imposed new - and more stringent - capital requirements, which has contributed to the ongoing rationalisation of the insurance sector.
Nevertheless, as of late 2012, it remains easy to identify weaknesses in the Russian insurance sector. Thus far, much of the development of the industry has depended on the growth of compulsory lines. Financial literacy among households is low. Most fundamentally, Russian households do not have sufficient trust to engage in long-term contractual relationships with the life companies. Although foreign insurers have a significant presence (particularly in the life segment), they already account for 25% of the aggregate capital - the legal limit - within the segment. Many insurers face downwards pressure on prices and margins - whether from competitors or distributors. The move by savings bank giant Sberbank to become the leading player in bancassurance in Russia is a positive wildcard, but provides no guarantee that life insurance will move beyond an embryonic level of development within the forecast period.
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The report incorporates BMI's latest economic forecasts and projections for relevant aspects of the Russian economy, such as spending on healthcare and registrations of automobiles. Crucially, the report places the Russian insurance sector in the context of all the other national markets that are surveyed by BMI.
Over the last quarter, BMI has made the following changes:
- Recent announcements from Rossgosstrakh (RGS) and other leading companies which were made through Q312 have been included.
- Projections take into account BMI's latest economic projections for Russia and assessment of the developing political environment in that country.
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