Russian insurance sector ‘gaining pace’, says AM Best

Russia’s relatively young insurance sector, although facing several challenges, is developing at an impressive rate, according to a new report by rating agency AM Best.

While insurance penetration is low at the moment – even across compulsory lines – the report predicts growth in premiums over the coming years, as standards of living and state spending increase, as well as the introduction of more compulsory lines.

“While the insurance sector is fraught with challenges, it is changing radically,” said Yvette Essen, report author and director of industry research, Europe & emerging markets at AM Best.

“There has been a concerted effort to dispel the image that Russia’s insurance market has a close association with tax-optimisation, with a crackdown on such grey schemes in recent years leading to a sharp decline in market participants.

“Commentators suggest that, considering the size of the insurance sector, no more than 100 insurers are warranted. Small companies exiting the market are expected to have little, if any, negative impact on overall premium growth, as the larger insurers have been increasing their dominance of the market.”