Boston, MA -- (ReleaseWire) -- 01/07/2014 -- At first glance, the main trends in Russia's insurance sector appear positive in late 2013. Nonlife premiums have been growing rapidly. Life insurance seems to be developing from a low base. Thanks partly to pressure from the regulator, much needed consolidation of the industry is underway. All this is in the context of an insurance sector where several of the largest players - and in particular market leader Rosgosstrakh (RGS) - clearly have scale by any standard. However, it is the weaknesses of, and threats to, the sector that dominate. Growth is overly dependent on compulsory lines. Neither the regulators nor the local insurance companies have made much progress in addressing the main challenge that must be overcome by the life segment: the lack of trust on the part of individuals and households.
At first glance, the prospects for Russia's insurance sector appear quite exciting. By any standard, the Russian non-life segment is both large and rapidly growing. Life premiums are surging, albeit 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.
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Nevertheless, as of late 2013, 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. Compulsory Medical Expenses Insurance (CMEI) is by far the largest line and represents about half of all premiums written across the entire sector.
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