2019 marks the 10th anniversary of the KPMG Russian insurance market annual survey. In our survey we traditionally discuss how Russian insurance executives assess the near-term outlook for the local insurance market.
2018 saw yet another year of robust financial performance in the insurance market, in particular due to a recovery in the CMTPL market and sound profit margins being maintained in the Casco segment. Against that backdrop, insurance companies are now actively seeking ways to enhance customer experience, integrate new technologies, and boost internal process efficiency.
Life insurance has regained leading positions in the insurance business, accounting for over 30% of total premiums in the sector. In H1 2019, however, we saw a significant reduction in premiums, resulting from a new set of regulatory measures aimed at controlling the sale of life investment contract policies.
The car insurance market experienced a recovery in 2018 after several years of stagnation. For the first time since 2014 Casco premiums grew, and a positive trend in CMTPL sales emerged. While a rise in Casco fees was, according to the insurers surveyed, driven by greater affordability and growing car sales, growth in CMTPL premiums was as a result of effective anti-fraud measures and a partial liberalisation of tariffs. The above factors may also impact the CMTPL loss ratio in 2019, which, according to respondents’ expectations, will decline substantially (to 70%).
Other segments in the general insurance market also demonstrated positive dynamics in 2018. The most noteworthy growth (+13% to 2017) was seen in personal property insurance policy sales, comprising mainly mortgage insurance and combined policies4. Most respondents view this segment as having the greatest upside potential. Cyber insurance, a new type of insurance on the Russian market, is also attracting interest from insurers seeking to cater to the needs of corporate clients.
New technologies are growing in importance in the insurance sector. Leading insurance companies have already launched online sales of Casco policies, with some also offering online claim settlements. However, there still appears to be considerable room for improvement when it comes to the quality of customer service and developing the customer relationship management (CRM) tool. Many companies are at an early stage of integrating new technologies.
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