KPMG presents the ninth annual survey of the Russian insurance market

The ninth annual survey of the Russian insurance market

Key directions and trends in 2018.

Sabina Kasparova

Head of PR and Communications

KPMG in the CIS


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Key findings:

  • In 2017, the life insurance segment was leading in the insurance market, its share in the amount of premiums accounting for 26%. 
  • It is for the first time over the past six years that the market of the third-party only insurance (OSAGO) has demonstrated a slowdown. The premium income in 2017 decreased by 5%. 
  • In spite of the record-setting growth of 12% in the market of car sales in 2017, premiums in the market of comprehensive and collision car insurance (CASCO) keep decreasing: the average premium decreased from RUB 47,000 in 2016 to RUB 41,000. 
  • All respondents are expecting the market consolidation trend to strengthen and the number of insurers to reduce this year: in 2018, around 50 companies are expected to withdraw from the market. 
  • Insurers see the opportunities for further development of the segment of general insurance primarily in using new technologies and optimising expenses.

In 2017, the life insurance segment was leading in the market, remaining its key growth area. Its share in the premium income accounted for 26%, while the income increased by 54%, which was twice the last year’s forecast. According the respondents’ expectations, in the end of 2018, almost one third of the premiums written will relate to this type of insurance. As in previous years, the investment life insurance (ILI), which is now sold by more and more market players, ensures the fast pace of growth. However, the popularity of this product is going to be on the wane in the coming two or three years. Because of the uncertainties with payments under the ILI polices, regulating authorities offered measures aimed at regulatory tightening in this segment, which were taken by insurers as debatable.

It is for the first time over the past six years that the OSAGO market has demonstrated a slowdown. The premium income decreased by 5% in 2017 due to such factors as the growth in the number of counterfeited polices and the number of uninsured vehicles. Therefore, the regulator has plans to gradually deregulate the rates. Most CEOs of insurance companies take this liberalization positively. However, it appears that this innovation will arrive too late to have a material effect in the current year. Therefore, according to insurers, the loss ratio of OSAGO will increase in 2018 to the record-setting level of over 90%.

The CASCO market has not demonstrated any growth over the past years either, regardless of the record-setting 12% growth in the market of car sales in 2017 and the efforts of the companies to reduce rates and increase the demand. However, at least one third of insurers believe that the current loss ratio is an optimal one, and absolute majority of companies are planning to focus on the increase in the portfolio volume in 2018 and place priority on an increase in the level of customer retention.

As the market of general insurance has stopped growing, insurers see the opportunities for further development of this business primarily in using new technologies, and 75% of respondents believe that the development of new technologies act as a break on legislative changes and the risk of being exposed fraudulent activities. Furthermore, according to the respondents, the development of property lending and medical insurance can also encourage market growth.

The number of respondents, who are not planning any significant decrease in expenses, decreased from 30% to 21%. The market players are going to focus on automation and standardisation of business processes. In 2018, 18% of CEOs are planning to cut back staff, while last year, the respondents had no staffing cut plans. This may be attributable to the hopes of using such technologies as labour robotisation and technology solutions for marketing and settlement of losses.

Read the full survey results here (Russian version only).

© 2022 KPMG. KPMG refers to JSC “KPMG”, “KPMG Tax and Advisory” LLC, companies incorporated under the laws of the Russian Federation, and KPMG Limited, a company incorporated under the Companies (Guernsey) Law, 2008, member firms of the KPMG global organization of independent member firms. All rights reserved.

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