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Thursday, April 25, 2024

Strategic Tasks Of Insurance Market Development

The progressive development of the domestic insurance market, an integral part of the country’s financial sector, directly depends on internal and external prerequisites and conditions of an economic, political, social and other nature.

Since the beginning of 2022, many segments of the Russian economy, including the insurance industry, have been experiencing significant sanctions pressure from a number of foreign states and international organizations. According to Central Bank estimates, the fall in Russia’s GDP in the third quarter in annual terms is 4%; in the fourth quarter, a decline of around 7.1% is expected. The Russian banking system as a whole demonstrated a certain stability against the backdrop of the crisis, but losses in the sector in the first half of the year amounted to 1.5 trillion rubles.


In fact, the insurance market is faced with a new reality. Significant assets of insurers in the foreign depositories of Euroclear and Clearstream were unilaterally blocked. Difficulties arose with foreign reinsurance as a result of the refusal of leading Western reinsurers to continue cooperation. The situation especially affected large insurers, which account for more than 90% of collections in the Russian Federation. Problems have emerged related to organizing and carrying out restoration repairs of vehicles due to the departure of a number of foreign automakers from the Russian market, disruption of logistics supply chains for components, shortage of original auto parts, etc. According to a study by the rating agency Expert RA, the greatest negative impact is the current economic situation had an impact on the comprehensive insurance market.

Considering the objective difficulties in adequately forecasting possible scenarios for the development of events and their consequences, the insurance community was actually forced to suspend work on the preparation of the Insurance Industry Development Strategy for the period until 2024 (previously, according to KPMG forecasts, the industry growth was expected to average 11.6% per year ) and focus on the implementation of those key tasks that were of priority importance for the insurance market in the current geopolitical and economic situation.


In cooperation with the Bank of Russia, the Ministry of Finance, the Ministry of Economic Development and other government bodies, consistent work was carried out to develop and implement support measures aimed at stabilizing the situation in the insurance market in conditions of external economic pressure.

In order to identify and analyze problematic issues that arise during the implementation of insurance activities, as well as develop recommendations and practical measures to solve them, a working group was promptly formed at the regulator’s site to adapt the insurance market to sanctions restrictions and their consequences.

In a short time, the insurance community prepared a package of proposals for the development of comprehensive measures to support the insurance industry and formed an appropriate “road map”. It is important to note that almost all large and medium-sized insurance companies, as well as all key committees of professional associations of insurers, took part in this work.

The main attention was focused on issues of ensuring financial stability in conditions of volatility and sanction pressure, measures to mitigate the risks of a significant increase in the regulatory burden, issues of adaptation of insurance companies to ensure compliance with requirements for financial stability and solvency, tax support measures, etc.

A significant block of proposals from insurers was devoted to the adoption of a set of measures in the MTPL segment, imputed and compulsory types of insurance, reinsurance, life insurance and a number of other areas.

A significant part of the measures proposed by insurers were fully or partially supported by the regulator and promptly implemented, which overall made it possible to ensure the stable functioning of the domestic insurance market in the current conditions.


Despite the ongoing sanctions pressure on the Russian financial market, the Bank of Russia and other relevant departments have come to understand the need to resume work on strategic planning documents for the development of the financial market in the medium term.

In August 2022, for the purpose of conducting public discussion, the Bank of Russia published on its website a consultation report “Financial Market: New Challenges in Modern Conditions.” It is expected that the results of its discussion with the business community will be used in preparing the Main Directions for the Development of the Financial Market of the Russian Federation for 2023–2025.

Ghulam Muhammad
Ghulam Muhammadhttps://www.juibd.com/
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