Market of corporate insurance: optimization instead reduction

Better than expected: demand for corporate insurance turned out to be low-sensitive to crisis events in economy. Even taking into account material decline in tariff rates, the volume of the market of corporate insurance in 2009 reduced compared to 2008 only by 6.3%. For comparison, the market of retail insurance which depends to a significant extent on bank lending, fell down over the same period of time by 13.8%.

Reasons for stability of the market of corporate insurance:

1. Low level of penetration of insurance services, especially in the medium and small business. Demand for corporate insurance is maintained on the part of major corporations operating on the basis of international standards of risk management.
2. A high level of imputed and compulsory types of insurance in premiums for corporate insurance (insurance of pledges, various types of liability).

As a result, a consequence of the crisis was not refusal of insurance on the part of major companies but optimization of insurance protection purchased by them. Another more negative consequence of the crisis is associated with the fact that increase in voluntary demand for insurance on the part of medium and small business was deferred for several more years.

Higher liability: on the background of general decrease, liability insurance became the only segment of the market of corporate insurance which has manifested positive dynamics in 2009. According to data of the Federal Service for Insurance Supervision, increase in insurance premiums for liability insurance amounted over 9 months of 2009 compared to the similar period of 2008 to 12.9%.

The main components of growth:

1. Inclusion of Russia in the system "Green Card" since the 1st of January 2009 (Voluntary Motor Third Party Liability).
2. Increase of the limit of liability for airline transporters per one passenger since the 6th of June 2008 (in 20 times - from 1,000 minimum salaries to 2.025 million rubles).
3. Development of liability insurance through self-regulating organizations (appraisers, auditors, designers, constructors, administrators).
4. Introduction since the 1st of July 2009 of compulsory liability insurance for businesses dealing with:
• transportation of cargoes by inland water transport;
• cargo transportation by sea transport;
• loading-unloading activity as applicable to hazardous cargoes on inland water transport;
• loading-unloading activity as applicable to hazardous cargoes at sea ports;
• towage by sea transport;
• provision of postal communication services.

Compulsory growth: restoration of the market of corporate insurance may be expected only in 2011 simultaneously with introduction of new large-scale compulsory types of insurance. Following the dynamics of GDP with a half-year lag, the market of corporate insurance will begin restoring not earlier than the second half of 2010. According to forecasts of Expert RA, in 2010 the volume of the corporate insurance market will remain at the level of 2009 (rate of increase will be 2.0%). Restoration of the market will be significantly accelerated upon introduction of new compulsory and imputed types of insurance, namely after:

1. Adoption of the draft law on especially hazardous facilities (which is widely discussed against after the accident at the Sayano-Shushensk Hydro Power Plant).
2. Adoption of the draft law "On Compulsory Insurance of Fire Safety" (proposed by the Ministry of Emergency after the fire at the club "Khromaya Loshad").
3. Adoption of the draft law "On compulsory insurance of civil liability of the transporter for causing damage to passengers" (offered by the Ministry of Transport of the Russian Federation).