Insurance premiums in recovery: Fitch

The Russian insurance sector is likely to report stronger net profit in 2020 due to improving premium volumes, reduced claims frequency during lockdown and significant foreign-currency gains from the Russian rouble depreciation, states Fitch Ratings. However, the agency expects insurers to report a weaker underwriting result in 2021 due to tighter pricing competition in motor lines and recent growth of low-margin protection products.

The Russian insurance sector has recovered in the third quarter of 2020 after the coronavirus-related lockdowns induced a drop in premiums in the second quarter. Over the most recent quarter Fitch has witnessed a recovery in demand for most key non-life lines and hybrid life products.

Life premiums grew four percent in the nine-month period of 2020, due mainly to growth in hybrid product sales, which were aided by low yields on bank deposits.  The Russian non-life insurance sector recorded a seven percent growth in primary premiums written in Q3 2020, after a 11 percent drop in Q2 2020. The recovery was supported by positive contribution from most key lines except for health insurance. Bancassurance lines, including accident and homeowners’ insurance, were an important recovery driver and were led by a surge in retail lending.