Cargoes with Russian coating – Newspaper Kommersant No. 59 (7504) dated 04/06/2023

The cargo insurance segment outpaced other types of property insurance in terms of growth rates. Over the past year, it increased by 22%, to almost 30 billion rubles. According to experts, the dynamics is associated with the transition of business from foreign to Russian insurers, as well as with the lengthening and complexity of supply chains. However, they warn that by the end of 2023, the growth rate of payments will outpace the increase in premiums.

Kommersant got acquainted with the NRA study, according to which in 2022 cargo insurance became the leader among property types in terms of premium growth rates. Insurers’ fees in this segment increased by 22% to RUB 29.5 billion.

Significant growth is due to changes in supply chains, leading to lengthening of routes, an increase in tariffs and the average cost of goods transported, the study notes. New logistics chains are being formed based on a decrease in cargo turnover with unfriendly countries and an increase in traffic with Eastern partners, explains Tatyana Nikitina, Senior Director of NRA Financial Companies Ratings. The top three leaders of the segment in terms of collections included Independent Insurance Group (RUB 4.9 billion), Ingosstrakh (RUB 4.7 billion) and Renaissance Insurance (RUB 3.8 billion).

Experts believe that fees for cargo insurance have also increased due to the transfer of business from foreign to Russian insurers. According to Roman Golubev, head of the cargo insurance department at Ingosstrakh, the business that was traditionally located in foreign insurance companies has become available to the Russian market.

Previously, all raw materials were insured mainly through traders in the foreign market, now all these goods are insured in the Russian market, and reinsured in the state RNPK, says Marina Zyuganova, Managing Director of the Underwriting Department of Property Types of Insurance for Legal Entities of Renaissance Insurance. Innokenty Lukyanov, General Director of the AST risk consultant, notes that the RNPK determines the conditions for all insurers, which cannot but affect the growth of the insurance rate and the adjustment of the conditions for accepting risk. Aleksey Bredikhin, Director of the ACRA Financial Institutions Ratings Group, adds that the additional increase in tariffs could be associated with a change in the schemes for the delivery of goods.

At the same time, the segment remains the least unprofitable (the ratio of payments to collected premiums) for insurers. Moreover, last year the volume of payments was almost halved, to 4 billion rubles, due to the absence of major insured events, the NRA says. However, as Andrei Barkhota, an independent expert, notes, the unprofitability of this type of insurance has decreased against the background of a relatively short time since the conclusion of cargo insurance contracts. Ms. Zyuganov also points out that one year is too short a time to draw conclusions about loss.

However, by the end of 2023, experts expect that the growth rate of payments will exceed the dynamics of premiums. According to Mr. Barhota, in 2023 premiums could grow by 10-15%. Andrey Zmiy, head of the corporate insurance department at the Soyuz Insurance broker, estimates the growth rate at 8–11%, to 32–33 billion rubles. The increase in fees will be due to an increase in the cost of reinsurance, increased sanctions pressure, even greater lengthening and complexity of routes, the appearance of additional intermediaries in the chains, he explains.

Payments in the segment can grow by 15-20%, Mr. Barhota believes. According to Mr. Zmiya, we should expect a twofold increase in annual payments, up to 9 billion rubles. Routes have changed, lengthened, new transloads of goods have been added, so in the horizon of three to five years, unprofitability will definitely grow, Ms. Zyuganova also notes. The more complex supply chains are used by customers, the higher the probability of losses, Mr. Zmiy confirms.

The risks of market participants are also associated with the exclusion from the coverage of a number of territories, adds Ms. Nikitina. Mr. Lukyanov adds customs delays and route changes to the list, which directly increase the likelihood of an insured event.

Julia Poslavskaya