The cargo transportation market

Subdued market: volume of aggregated contributions to insure cargo transportation declined (considering inflation). In 2007 the total market of cargo insurance and liability of carriers went up from 14.8 to 15 bln rubles (about 1% growth). According to Expert RA, the first half of 2008 showed no decline in increment. Share of insured cargo at the market has generally grown up with insurance becoming an inherent part of logistic structure, but collections remain practically unchanged. Still, growing potential of the cargo insurance market is huge. Share of insured outgoing cargo constitutes 80-85%, the internal figure deviates at the level of 20-35%.

Tariff wars: tough price competition at the market made tariffs hit the bottom. Insurance premium is redistributed among insurers (mostly among the top twenty) due to redistribution of the hard-won client base (in former years). Tariffs still continue to decline, but the resources for the downward movement are practically exhausted. Dumping policy of new companies at the market would make them unprofitable and cause to increase tariff rates.

Obstacles: the full-scale cargo transportation market development is hindered by problems. Mostly it is dubious insurance legislation, improper cargo transport paper work and poor insurance culture. Current insurance legislation makes it almost impossible to insure a carrier's liability. The liability is a legal duty and may be insured only in cases provided by the law. There is no provision for this kind of insurance in current legislation. As a result some insurance contracts are annulled after an occurrence of the insurance case to create the atmosphere of distrust at the cargo transportation market.