State reinsurance – Newspaper Kommersant No. 44 (7489) dated 03/16/2023

Against the backdrop of sanctions and non-cooperation of companies from unfriendly countries, Russia’s domestic reinsurance market tripled last year. However, most of the transferred premiums fell on the state RNPK, which the Central Bank increased the guaranteed capital. Experts expect that the share of RNPK will continue to grow, which may lead to loss of competition and concentration of risks.

At the end of 2022, the volume of premiums transferred to reinsurance in the Russian market amounted to almost 160 billion rubles, follows from the report of the Central Bank, published on Wednesday, March 15. Thus, the volume of the local reinsurance market more than tripled over the year. This is due to the creation of additional reinsurance capacities – guarantees from the Central Bank to increase the announced capital of the subsidiary RNPK up to 750 billion rubles.

As a result, RNPK accounted for about 65% of premiums ceded to reinsurance, while other insurance companies accounted for only 35%. In particular, Ingosstrakh accepted more than 9 billion rubles. premiums, AlfaStrakhovanie – 7 billion rubles, VSK accounted for more than 6 billion rubles. premiums follows from the data of the Central Bank. At the same time, the total volume of premiums transferred to reinsurance at the end of 2022 decreased by almost 14% compared to 2021.

The growth of the Russian market took place against the backdrop of sanctions. The US imposed blocking sanctions on the largest Russian banks (including Sberbank, VTB, Sovcombank, Otkritie, PSB), as well as their subsidiaries, including insurance companies (where the share of ownership exceeded 50%). In particular, Rosgosstrakh, Sovcombank insurance, Sovcombank Life appeared on the OFAC list. In March 2022, the State Duma of the Russian Federation already adopted a law prohibiting reinsurance in companies from unfriendly countries.

According to the Central Bank, at the end of 2021, 72% of reinsurance protection (for 116 billion rubles) was placed by Russian insurers on the international market. The head of the Association of Professional Insurance Brokers, Katerina Yakunina, explains that the top five countries included the UK, Germany, Switzerland, France and the United States, while China ranked only eighth. According to Ms. Yakunina, after the ban, the volume of transfer of risks to reinsurance abroad has decreased to almost zero. VSK clarified that large property risks, aviation and maritime transport, as well as liability to third parties are usually transferred to reinsurance.

Experts agree that RNRC will continue to increase its share in the reinsurance market. According to Nikolai Galushin, General Director of RT-Insurance, the transfer of risks to other insurance companies in Russia will be limited, since subsequently these risks will still fall into RNPK, but at a large discount in price, therefore RNPK will artificially limit other companies in taking risks. into reinsurance in order to increase their own receipts of reinsurance premiums. However, experts note the risks of the growth of the influence of RNPK. According to Alexander Tsyganov, a professor at the Financial University under the Government of the Russian Federation, the prevailing role of the company bears the risk of reducing competition, as insurance companies will wittingly or unwittingly focus on the position of the RNPK and broadcast it to policyholders. The RNPK did not respond to Kommersant’s request.

At the same time, according to Katerina Yakunina, one should not expect any significant volumes of transfer of reinsurance premiums abroad to friendly countries, since the CIS has a small reinsurance capacity, which does not exceed the total capacity of Russian insurers. Tatyana Nikitina, senior director of NRA ratings for financial companies, notes the difficulties of working with China due to Chinese fears of secondary sanctions, problems with settlements (if they are not in yuan or rubles), little experience in underwriting Russian risks and likely problems with transferring them to retrocession. Aleksey Yanin, managing director for ratings of insurance and investment companies at Expert RA, adds that “few market participants can afford to invest considerable effort and money in trying to establish work with friendly foreign reinsurers.”

Julia Poslavskaya