THE BANK CHANNEL GONE DRY:
The bank insurance market in 2008

The bank insurance growing trajectory was cut short by the crisis. The bank insurance market showed 31% growth in 2008 against 2007 to achieve 90 bln rubles. But, according to Expert RA, without the crisis the increment might reach 50-55%. The growth was mostly attributed to retail types of insurance, same as in the past, covering about 80% of all contributions (58% - CASCO, 15% - mortgage insurance).

Expert RA forecast the bank insurance market to be halved in 2009. The plunge would be chiefly explained by reduced car crediting and, consequently, by reduced autocasco share - banking insurance leader in past periods. Contributions through bank channels would be secured, first of all, by "old" mortgage contracts and by insurance of legal entities.

The financial storm passed Russian insurers by, as distinct from insurers in America and Europe, many of which went down due to excessive credit risks. The financial crisis made it clear that underdevelopment of the bank insurance in Russia, in a way, played a positive role for domestic insurers. Small amount of bank risk crediting comparing with the whole bank insurance structure saved insurers from enormous payments. In 2008 the share of bank risk insurance was only 0.35% of the total volume of bank insurance.

Bank insurance reduced volumes should result in reconsidering conditions of cooperation between banks and insurance companies. The market is to be built anew, on the principles of mutual benefit, reasonable commissions and grounded tariff policy. Before the crisis bankers-insurers partnership was not equal: conditions were dictated by banks. In the post crisis period interest of insurers will gradually be taken into account to a greater extent.