The Russian national reinsurance company showed a reduction in fees in 2023

Despite the increase in the total volume of premiums under inward reinsurance contracts, the largest player, the Central Bank-owned Russian National Reinsurance Company (RNPK), showed a decrease in fees in 2023, while they increased for other insurers. The reason is the tough policy of the RNPK, experts believe, expecting the trend to continue at the end of the year.

The Central Bank published performance indicators of Russian insurance companies: at the end of 2023, the volume of premiums under inward reinsurance contracts increased by 4%, to 164 billion rubles. At the same time, the largest market participant, RNPK, showed a decrease for the first time in several years – by 13%, to 88 billion rubles, while other insurance companies showed significant growth.

Thus, the collections of SOGAZ more than doubled, to 10.4 billion rubles, AlfaStrakhovanie – by 22%, to 8.6 billion rubles, Ingosstrakh – by 14%, to 10.5 billion rubles, RESO-Garantii – by 29%, to 8.3 billion rubles, VSK – by 43%, to 9.7 billion rubles. Insurance companies and RNPC did not promptly respond to Kommersant’s requests.

The trends are primarily related to the policies of the RNPK. “The tightening of the conditions for accepting risks in reinsurance forced insurers to increase their own retention and priorities for obligatory programs, reducing the volume of premium transferred to reinsurance in principle, that is, reducing the fees of RNPK,” explains the All-Russian Union of Insurers (VUS). For example, in the warehouse risk insurance segment, RNPK introduced additional exclusions from coverage, which included losses resulting from violation of fire and industrial safety rules, the use of household heating appliances not provided for in the documentation and independently installed electrical wiring, and raised tariffs for warehouse risks (see “Kommersant”) ” dated September 25, 2023).

“At the same time, the increase in the own retention of Russian insurers has led to the fact that in cases where RNPK retains only a share of the obligatory assignment, insurers began to use the capacity of other insurers, increasing their fees for incoming reinsurance,” the BCC adds.

This indicates serious changes in the reinsurance market, experts believe. A redistribution of the market is taking place, the period of mechanical re-registration of contracts previously concluded with foreign reinsurers at RNPK is ending, explains Alexander Tsyganov, a professor at the Financial University under the Government of the Russian Federation.

According to Alexey Yanin, managing director for ratings of insurance and investment companies at Expert RA, as a result, reinsurance protection is diversified, and insurers receive a new source of income. “In addition, this approach allows market participants to take a more flexible approach to risk assessment and better adapt to the needs of large clients in insurance protection, since tightening reinsurance conditions inevitably affects the price of the policy for the policyholder,” says Katerina Yakunina, Chairman of the Board of the Association of Professional Insurance Brokers .

In 2024, RNPK fees will continue to fall, experts say. Market participants talk about the need to develop alternatives. The closure of international programs and the trend to increase own retention have already exhausted themselves and are unlikely to have an impact on a further reduction in the cess, believes Andrey Tverskoy, head of the reinsurance department at Zetta Insurance.

Reducing the cess makes room for new players to enter the segment. In particular, the North Korean reinsurance company Future Re Company tried to enter the Russian reinsurance market (see “Kommersant” dated August 8, 2023). According to market participants, “this story has not been developed,” but they admit that there will be new attempts.

Yulia Poslavskaya