Russian life insurance market

Russian life insurance market evolving

The Expert RA rating agency has completed a research study to look into the life insurance effort in the course of 2006, the relevant presentation being made to the second annual conference "Life Insurance: Shaping the Market".

"The actual life insurance effort has reached a critical stage: for the first time the total of life insurance premium receipts has come to be in excess of the value from the formulaic arrangements", says A. Yanin, head of the Expert RA rating agency's insurance division. "Retail and borrower life insurance premium volumes have for the first time exceeded the level of captive insurance amounts".

In the course of 2006 the actual life insurance market had grown by more than two times over the 2005 level (from RUR 6.1 billion to RUR 12 billion). Notably, the market happened to be radically stripped of scheme-based arrangements, their share dropping from 76% down to 25%.

In the course of 2007 the life insurance market is expected to steadily grow to hit RUR 17 billion by the close of the year, with the share of real life insurance market nearly reaching 90% of the total value of relevant insurance premiums, according to Expert RA estimates.

In 2006, retail and borrower life insurance receipts came to stand at 55% of the real market for life insurance services. Following a steady expansion (from RUR 4 billion to RUR 5.4 billion) in the course of 2006, the captive life insurance growth is likely to slow down its rate to 20%, according to Expert RA projections.

Year-on-year growth (close to 200% for 2006) in the volumes of borrower life insurance premium receipts is indicative of this market segment going through a period of explosive rise, the trend for the most part having to do with development of mortgage lending programs. In 2006 the value of borrower life insurance market reached RUR 3 billion, the metric expected to surge by more than 65% by the close of 2007, according to Expert RA analysts.

Retail life insurance has come to be a most promising and fast-expanding line of business in the market for life insurance services. It is precisely this segment that most of the new market entrants have been trying to break into and develop. In the course of 2006, the value of retail life insurance market reached RUR 3.6 billion, with the metric expected to escalate to RUR 5.5 billion by the close of 2007, according to Expert RA estimates.