A.M. Best releases special report regarding improvements in the Russian marketplace.
According to a report released by A.M. Best, within the international insurance industry, the Russian sector is a young one, faced with significant overcrowding and competition and yet, regardless of these notable challenges, it is maintaining a trend of radical changes.
The name of this special report was “Russia’s Insurance Revolution Begins to Gain Pace”.
It focuses on the low penetration of coverage within the country, even when there is a small amount of risk factors, or none at all, such as in medical plans and other compulsory lines. What A.M. Best has forecasted, is that though there are challenges being faced by the insurers – such as the ability to comply with the increased requirements for capital, combined with the low demand for coverage products – there will continue to be growth in the total underwritten premiums.
The reason for this prediction is that the report acknowledges the impact of the new compulsory lines of business which have been introduced, as well as the state spending supported economic development, as well as the growing awareness of the benefits of coverage over the long term.
Beginning on the last day of 2011, Russia had 579 registered insurers. The international insurance industry report by A.M. Best pointed out that the number of these companies has shrunken significantly over the last twenty years, from a number that was higher than 4,000. It is expected that their numbers will continue to dwindle into future years.
The author of the report, Yvette Essen, who is also the director of industry research for Europe and emerging markets, explained that the gradual decrease in the number of insurers shows the impact of the significant lowering in tax optimization programs, in combination with the increased requirements for capital.
Essen explained that even though the local and international insurance industry sector in Russia are still facing significant challenges, the environment is undergoing radical changes. A serious effort through widespread crackdowns has been made to change the image of this marketplace to demonstrate that there is not a close link with tax optimization.