Insurers have gone to zero

important segments of the only voluntary health insurance (VHI) showed a growing positive trend. However, the factors that contributed to this growth, are unlikely to work in the coming economic storm.

At the end of 2019, the total volume of collected insurance premiums amounted to 1 trillion 480 billion rubles, which is only 0.1 percent higher than a year earlier worse over the last 15 years, it was only in 2009 (when the collection of contributions fell 7.5 percent). While the number of concluded insurance contracts increased by 2.6 percent (up 207.8 U.S. million). The explanation is obvious – selling expensive policies available relatively small audience (like investment life insurance with an average annual contribution in 531 thousand rubles), fell, then as cheap insurance sold on the rise (primarily policies of voluntary health insurance, where average premiums for the year amounted to 10.6 thousand rubles).

the Most notable event for the insurance industry in 2019 was a sharp deflation of the bubble the investment life insurance (coli). Previously, from 2015, when these two types of policies, namely coli was pushing up as “life” and insurance in General. Note that the attitude of the Central Bank to coli was wary from the very moment of its appearance. The fact that the rapid growth of sales was ensured largely due to promised high returns of such policies on the background of decreasing interest on Bank deposits coli seemed an attractive alternative. However, sellers of such policies was trying not to show that the yield of this is only promised, but not guaranteed. In order to limit boom coli, the Bank of Russia in April 2019 in the decision-making procedure obliged the insurers and intermediaries to inform potential buyers about the key terms of the deal. In 2019 also fell wave completed five-year contracts concluded in the beginning of the sales of the coli policies. And it turns out that promises of high yields of these insurances unsubstantiated: it follows from the statistics of the Central Bank, 31% of the coli policies showed zero yield, 20 per cent less per cent, 42 per cent of policyholders – between 1 and 5 percent per annum. And owners of only 7 per cent of insurance managed to earn 5 percent per annum or more. As a result, premiums in the life insurance segment as a whole fell nearly 10 percent.

This figure would be even more sad if not for the sale of policies “life” in the framework of the insurance of borrowers (i.e. Bank assurance). Last year the portfolio of credits to individuals increased, according to the Bank, 18.6 percent (in 2018 at a 22.8 per cent). A significant portion of these loans in voluntary-a compulsory order is accompanied by the purchase of insurance (evasion from those leads either to the denial of credit or higher interest with��awka on it). It is not surprising that the collection of premiums for insurance against accidents and diseases in 2019 increased by 10.6% (to 187,4 billion).

Motor insurance last year in its mandatory part (CTP) showed a decline (the collection of premiums decreased by 5.3 percent, to 213,9 billion), and voluntary (hull) – very weak growth (1.1 percent, 170,5 billion). Giving the introduction in 2003 a tremendous impetus to the growth of the insurance market in Russia, the “motor” soon turned into a constant headache for insurers. Their attempts to liberalize the tariff failed, but the insurance companies still managed to achieve significant changes in the payment procedure that removed the problem. However, as you can see, temporarily. Individualization of tariffs resulted in a simultaneous decrease in the average cost of the policy (according to the head of the Russian Union of insurers Igor Jurgens, with 5558 5372 to RUB) and growth benefits (2.4 percent). In the end, as a few years earlier, in several southern regions of Russia the balance of premiums and payments for insurance has become critical for insurers. The reduction of the average cost of the policy in 2019 was observed in CASCO insurance (1.6 million per cent to 35.1 per thousand) – however, this trend is observed for the fourth consecutive year and gradually fades away.

In this disappointing backdrop stands the state of Affairs in the voluntary health insurance – during the year the collection of premiums is increased by 19 percent (to of 180.6 billion). Reasons for the success of several. The first – increasing the flexibility of insurers offering a variety of content policies, including insurance with a deductible, with coverage of cancer treatment and medical examinations. The second reason is to own insurance companies is not relevant, and connected with the tightening of control over migrant workers. Most of them are not supposed to CHI that does not negate the obligation to have at least some health insurance. Buying more cheap supplementary health insurance allows migrant workers from former Soviet countries outside of the EEU, to follow the requirements of the law at minimal costs. This, obviously, is determined by a number of trends in the LCA. First, in 2019 set the historical record of growth rates and number of contracts (38 percent to 17.1 million units). Second, the proportion of individuals in contributions LCA has reached 20 percent. Other policies, as before, were bought by legal entities, i.e. by employers for their employees. Thirdly, there has been a decrease in the average premiums for LCA legal entities for the year by almost 20 percent (to 53.1 thousand) as the number of contracts for 40.6 percent. This means that LCA has been included in the social package is not only large but also medium and even small businesses.

At the end of 2019 years it is worth noting another trend in insurance, which has remained unchanged for 25 years: the number of subjects of insurance business, SSD (this is the actual insurance companies plus the brokers), has been steadily falling. The past year was no exception: the number has declined by 7.3 percent, to 275 (at its peak, in 1996, in Russia there were more than 2800).

with regard to sales channels, their ratio remains stable. About 75 percent of the premiums the insurers receive from the intermediaries, 20 per cent from direct sales, 5 per cent of sales over the Internet (mainly insurance and travel insurance).

What awaits the insurance market in the coming year? The formulation of projections for the background of the unfolding planetary crisis – a thankless task. However, a number of points still can be described. Even in relatively calm 2019, insurers have observed the growth of payments by 16.7 percent, to 609,6 billion. A significant portion of this increase was accounted for by payments to life insurance, including coli – prisoners before end of three – and five-year contracts. As a result, the current year will fall peak growth of payments under three-year contracts of life insurance. As noted by the Central Bank, “in 2017 the growth rate of insurance premiums (except life insurance of borrowers) were the highest for the entire history of observations (61%)”. Can hardly wait for the support of mortgages, where, as already mentioned above, the life insurance policy is almost mandatory – against the backdrop of the already announced program of vacation credit on previously issued loans optimism looks misplaced.

it Seems that disappointing at the end of the year will be indicators of motor insurance. Although the number of car loans in 2019 increased by 11.9 percent, sales of new cars fell during the year by 2.5 percent. So the program of state support of car loans and car leasing worked even stable in time only partially. To speak about growth of sales of insurance policies against accidents and diseases, which, as already noted, closely associated with Bank assurance, also is hardly appropriate – credit, “physicists” have every reason to go into minus at the end of this year.

as for the prospects of the last significant driver of the insurance industry – LCA, here to expect any positive results in 2020 is not worth it. Benefits, it is easy to assume the expenses of the business at all levels will go under the knife one of the first. Migrant workers – regardless of the extension of quarantine measures and the impact thereof on the migration policy of the Russian authorities – will not be able to replace this fall.

However, to get through a difficult time, insurance companies have some stocks. By the end of 2019 the size of the industry profit after tax to 207.4 of milliardo�� rubles (plus 26 percent by 2018). As noted by Igor Yurgens, “is the result of successful investment policy of insurers, and digitalization, which allows to significantly reduce costs”. But digitalization even in a crisis no one not going to cancel.