In the third quarter of 2022, the insurance market not only showed a steady increase in collected premiums after a disastrous second quarter, but also showed a record result of RUB 466 billion. High rates are primarily due to the acceleration of inflation this year, which affected the cost of policies, as well as growth in demand for certain types of insurance. At the same time, experts expect the market to grow by the end of the year, although insurance companies are less optimistic, expecting a decrease in indicators.
The volume of insurance premiums collected in the third quarter reached 466 billion rubles, a record high since the beginning of 2018 year, follows from the quarterly report of the Central Bank. This result is 13.6% higher than in the disastrous second quarter of this year, and 0.8% higher than a year ago. According to the regulator, the recovery of the market ensured an increase in fees in the segments of accumulative life insurance (CLL) (see Kommersant of November 17), OSAGO, property insurance of legal entities, and auto hull. Credit types of life and health insurance continued to show negative dynamics.
The main growth drivers are the increase in OSAGO tariffs and inflationary growth in other types of insurance, primarily car hull, indicates the managing director for ratings of insurance and investment companies “Expert RA” Alexey Yanin. Anna Avakimyan, chief analyst at RegBlok, adds that in the second and third quarters, insurance companies massively received additional premiums on former transport facilities to bring the sum insured closer to market realities. The regulator also notes that the dynamics of auto insurance was influenced by the rise in the cost of policies associated with rising prices for cars and spare parts, including due to their shortage.
According to Alexander Tsyganov, a professor at the Financial University under the Government of the Russian Federation , the fees were affected by the redistribution of resources: the HOA received an increase due to part of the HOI insurers, and part came from the securities market, where conditions have changed significantly. Some of the insurers came to the housing insurance market without receiving the desired return on deposits, he notes. According to the Central Bank, the low yield on completed contracts also contributed to the decrease in the attractiveness of ILI. In particular, the average actual yield on such policies that ended in the third quarter of 2022 under three-year agreements was only 0.4% per annum, under five-year agreements – 1% per annum. The advantage of the NSJ is their great conservatism, the Central Bank believes. In particular, in the past quarter, the programs of the life insurance were mainly focused on lump-sum contributions, as well as on a previously known fixed income.
At the same time, Mr. Tsyganov believes that the upward trend will continue in the fourth quarter. “Cars have objectively become more expensive, and this will definitely manifest itself during the prolongation and conclusion of new contracts, albeit to a lesser extent due to the reduction in the car market itself and car loans,” he notes. We should expect growth in cargo insurance, which is now becoming more and more domestic, the expert points out. In particular, according to the Central Bank, in the third quarter this segment of insurance grew by a third due to “an increase in the cost of insurance coverage in the context of restructuring logistics chains and supply channels, as well as with the expansion of demand for it.” In general, the increase in fees, comparable to the level of inflation, is likely, the expert sums up.
Nevertheless, market participants are still less optimistic. According to the Expert RA study, most insurers believe that the insurance market is expected to decline by 10% or more, while investment life insurance, which will drop by about 20%, and credit life insurance will provide a decline. Ms. Avakimyan also estimates that the annual dynamics of the insurance market will be somewhat lower than the corresponding indicator for nine months. However, according to her, the growth of the average check in insurance leveled the decrease in the number of policyholders. At the same time, earlier experts expected a decrease in the collection of premiums by 5% at worst, and at best, the indicator would remain at the level of last year (see Kommersant of September 28).