Russia’s economic recovery paved strong support for the return of demand in non-life insurance, while the reopening of credit lines fuelled life business.
Despite the robust increase in top-lines, ineffi cient administration and excessive acquisition costs continue to put pressure on margins. In an increasingly competitive environment management of the bottom line has become the chief concern. While redesign of target operating models coupled with reviewed underwriting processes are expected to provide some relief, prohibitive intermediary commissions must be addressed through tougher regulatory intervention. The growing influence of bancassurance also seems to have tipped the scale further towards intermediary based supply, away from more desirable product driven competition.
As Russia continues to offer attractive longer term growth opportunities, 2012 has already born witness to renewed interest from prominent foreign players, while domestic M&A activity is on an upward trend. The incoming requirement for an industry-wide transition to IFRS under the Law on Consolidated Reporting presents a major leap towards transparency and comparability
within the insurance sector.