News from the Russian insurance market 2022/2023

Latest news from the Russian insurance market 2022/2023

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As we reported earlier, after the outbreak of the war in Ukraine Russia and Belarus have been cut off from the Western international insurance markets by regulations put into force by both the European Union and the Russian Federation.

GrECo and MAI decided to leave Russia, but since it is very important for us to support our clients and those of our business partners worldwide, we opted for continuity and sold our companies to the local management headed by Andrey Panov, who will run the company on the local market as Russian company Nobilis Brokers. In this update of our report, we want to give broad information on news from the market in Russia, as there have been many changes during 2022 and many developments may still come.

Status of insurance in Russia

The Russian insurance market consists of 222 market players (146 Insurers, 58 licensed insurance brokers and 19 other insurance related companies – based on official report, provided by the Central Bank dd. 01/04/22), but their number is decreasing (e.g. minus 7 within one year).
 
After the restrictive measures taken by the state in connection with Covid-19 in 2020/2021, the insurance industry was recovering, but the outbreak of hostilities in Ukraine had huge consequences on the local market during last year..

  • The market is cut off from international reinsurance – so capacities offered shrink to the net capacities of insurers plus capacity of Russian National Reinsurance Company (RNRC) that has been strengthened in its role by a capital increase by Russian National Bank;
  • All Russian insurance companies have to offer RNRC 50% line in all outward reinsurance business (the compulsory ceding RNRC by Russian insurers was increased from 10% to 50% of reinsurance order, in accordance with Law FZ 46 dd.08/03/22);
  • The financial security of Russian insurers (satisfactory in the past) will worsen substantially, rated international reinsurance is not going to be available for some time to come;
  • There are currently four Russian insurers being under EU and/or US sanctions: SOGAZ, Rosgosstrakh, SberInsurance (non SDN list) and Sovkombank Insurance. Sanctions do, of course, not apply for purely Russian business, for instance if the Russian subsidiary of an international group buys insurance on the Russian market.
  • Russian insurance companies continue business using their own increased capacity (co-insurance schemes for bigger risks) and increased reinsurance by RNRC.
  • For the time being, the financial data of Russian companies are not to be disclosed due to an order by the Central Bank of Russia.
  • The main local Insurers at the local market are: Sogaz, Ingosstrakh, Sberbank, AlfaStrakhovanie, VSK.
  • During the first six months of the insurance legislation in 2022 main international insurers were to stop their business activity (they decided to put a ban on quotes and policy issuance for new business and even renewals), but none of them has declared its exit.

The situation with Western insurers that have been working in Russia is as follows:

  • Zurich Russia sold the business to new Russian owners and was rebranded – the new name is Turicum”;
  • AIG Russia sold the business to new Russian owners; it was rebranded at the end of 2022 – the new name is “Gardia”;
  • Chubb Russia has not announced further decisions regarding the Russian entities; right now they cannot issue new or renew expiring policies;
  • Allianz Group sold a majority stake in its Russian operation to InterHolding LLC, the owner of Russian P&C insurer Zetta Insurance. Allianz Russia holds a minority stake of 49.9% in the combined company;
  • HDI Russia still continues operating business activity with no change during 2022.

Risks located in Russia not any longer covered by International Programs

Coverage in a global insurance program with local fronting policies is now unavailable for risks located in Russia due to the territorial exclusion clauses of Western insurers and the impossibility to integrate Russian policies for lack of international reinsurance. Thus the only option is local stand-alone insurance with purely Russian Insurers.  

Market tendencies

The following tendencies can be observed on the market:

  • In general, Russian insurers are ready to place traditional lines (PDBI, TPL/ PL/ EL. PI, cargo and D&O), however it is still a hard market for the line Fidelity/Crime (difficult and expensive to place);
  • Insurance tenders are subject to preliminary providing very detailed underwriting information (filled in insurance questionnaire on each insurance line);
  • Tenders take longer and usually the insurance offer is valid for 30 days only;
  • The main T&C with the local insurers may differ from former policies that were part of global programs (lower limits, different wording); the prices for such policies are likely to be higher;
  • Increased interest for “terrorism” and “war” cover in all lines (but mainly in property and cargo); but most local insurers, on the contrary, extend exclusions of territory coverage (due to war risk);
  • Due to very poor loss statistics within the last years on the local insurance market in respect of warehouses (stock insurance) and 2 total losses, well-noted at the local market (Ozon warehouse and OBI store), lots of local carriers are either not interested in providing the coverage or need at least very detailed info on the location (or may be a survey carried out by their engineers) for even giving a quote;
  • Despite the current situation, there is an increase of motor insurance (values of the car/ spare parts were increased, change of “basis rate” for CMTPL policies) as well as cargo and property insurance (for legal entities).

Local support provided by Nobilis Brokers

Telephone and internet communication with Russia is working despite the current political situation. For more detailed information on insurance in Russia and for support for insuring or placing risks Nobilis Brokers can be contacted directly by e-mail: A.Panov@nobilisbrokers.ru .
 
(Details of this report have been provided by Andrey Panov and Anna Dyachenko, Nobilis Brokers).

Andreas Krebs

Andreas Krebs

Head of Insurance Mediation Services

T +43 5 0404 229

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