Key directions and trends in 2018.
In 2017, the life insurance segment was leading in the market, remaining its key growth area. Its share in the premium income accounted for 26%, while the income increased by 54%, which was twice the last year’s forecast. According the respondents’ expectations, in the end of 2018, almost one third of the premiums written will relate to this type of insurance. As in previous years, the investment life insurance (ILI), which is now sold by more and more market players, ensures the fast pace of growth. However, the popularity of this product is going to be on the wane in the coming two or three years. Because of the uncertainties with payments under the ILI polices, regulating authorities offered measures aimed at regulatory tightening in this segment, which were taken by insurers as debatable.
It is for the first time over the past six years that the OSAGO market has demonstrated a slowdown. The premium income decreased by 5% in 2017 due to such factors as the growth in the number of counterfeited polices and the number of uninsured vehicles. Therefore, the regulator has plans to gradually deregulate the rates. Most CEOs of insurance companies take this liberalization positively. However, it appears that this innovation will arrive too late to have a material effect in the current year. Therefore, according to insurers, the loss ratio of OSAGO will increase in 2018 to the record-setting level of over 90%.
The CASCO market has not demonstrated any growth over the past years either, regardless of the record-setting 12% growth in the market of car sales in 2017 and the efforts of the companies to reduce rates and increase the demand. However, at least one third of insurers believe that the current loss ratio is an optimal one, and absolute majority of companies are planning to focus on the increase in the portfolio volume in 2018 and place priority on an increase in the level of customer retention.
As the market of general insurance has stopped growing, insurers see the opportunities for further development of this business primarily in using new technologies, and 75% of respondents believe that the development of new technologies act as a break on legislative changes and the risk of being exposed fraudulent activities. Furthermore, according to the respondents, the development of property lending and medical insurance can also encourage market growth.
The number of respondents, who are not planning any significant decrease in expenses, decreased from 30% to 21%. The market players are going to focus on automation and standardisation of business processes. In 2018, 18% of CEOs are planning to cut back staff, while last year, the respondents had no staffing cut plans. This may be attributable to the hopes of using such technologies as labour robotisation and technology solutions for marketing and settlement of losses.
Read the full survey results here (Russian version only).