Insurance in the Far East

The Far-Eastern Federal District includes nine independent subjects of the Russian Federation: the Republic of Yakutia, Primorski and Khabarovsk Territories, Amur Region, Kamchatka Region, Magadan Region and Sakhalin Region as well as the Jewish Autonomous Region and the Chukotski Autonomous Area. All of them differ in social and economical conditions which affect the degree of development of the insurance market. Thus, the insurance is developed in the Republic of Yakutia and Primorski Territory which collect 23.2% and 20.7% of the total insurance contributions in the District, respectively. Approximately equal portions are collected by Sakhalin Region (14.8%), Amur Region (11.9%), Khabarovsk Territory (11.6%) and Kamchatka Region (11.3%), the rest (6.5%) being collected by Magadan Region. As a whole, 1.4% of the total contributions collected by the Russian insurance companies in 2000 represent the share of the Far East.

The principal peculiarity of the insurance market in the Far East is that the mandatory insurance prevails over the voluntary one by 1.3 times (see Table 1). Considering this, the quota of contributions for the mandatory kinds of insurance in the over-all amount of contributions in the Far-Eastern Federal District practically remained unchanged in during the last three years and came to 60.1 per cent in 2000 (in 1998, it constituted 66.9 per cent). In spite of that, the number of companies engaged in mandatory kinds of insurance is considerably lower than the number working with voluntary insurance. Thus, according to the 2000 data, among 56 insurance companies which had submitted the reporting in due time and had non-zero figures of contributions in the insurance, only 21 companies were engaged in mandatory insurance and 43 companies are offering voluntary insurance. Amongst the latter, 39 companies are involved in individual insurance (except life insurance), 40 - in property insurance, 31 - in liability insurance, and 19 companies are selling life insurance. As for the mandatory insurance, the leaders are "Sakhamedstrakh" (Yakutsk), "Arkhysmedstrakh" (Yakutsk), "Dalmedstrakh" (Blagoveshchensk), "Zdorovye" (Yuzhno-Sakhalinsk), and "Biopolis" (Petropavlovsk-Kamchatski). Their quota amounts to 66.1 % of all the collections for the mandatory insurance in the District. Among the Russian regions, the Republic of Yakutia ranks 13th by the amount of contributions from the mandatory insurance, Sakhalin Region ranking 19th, Kamchatka Region - 24th, Amur Region - 27th, Magadan Region - 32nd, and the Merytime Territory - 58th.

Table 1 Insurance contributions as per various kinds of insurance (RUR, thnd)

The voluntary insurance is developing in this District dynamically as well. Among the Russian regions, Primorski Territory ranks 12th as per the amount of contributions for all kinds of insurance, other than life insurance, Khabarovsk Territory ranking 23rd, the Republic of Yakutia - 46th, Sakhalin Region - 50th, Amur Region - 59th, and Kamchatka Region - 63rd. The increment of contributions collected in insurance products other than life insurance, amounted in 2000 to 25.9 % compared to 1999. The most dynamic kind of insurance has been insurance of liability. In this sector, the growth came up to 59.3%. However, the contributions in the field of life insurance decreased in 2000 by 9.5 per cent compared to 1999 (see Table 1).

The situation established in the insurance market in 1999 remained unchanged by the end of 2000. Thus, as for the life insurance which traditionally dominated in the payment structure of the District's insurance companies, the figure of payments remained at the level of 1998 with 102.4% (1998 - 100.9%) (see Table 2).

Oable 2 Insurance payments in various kinds of insurance (RUR, thnd)

The levels of payments in the sectors of property and liability insurance are low and constitute 0.29 and 0.08, respectively which is typical for many regions. In the course of the last year, the concentrations of the insurance market continued to increase (see Table 3): from 1997 through 2000, the quota of the largest company in the contributions for the voluntary kinds of insurance increased by 11.8% through 19.1%, three leading companies reporting a growth from 28.6% to 36.2%. As a whole, one can witness a strengthening of competitive positions of the first ten companies which are covering the greater part of the market.

Table 3 Market concentration of voluntary insurance (estimated on the basis of insurance contributions), %

In 2000, "Nakhodka Re" a reinsurance company was recognized as a undisputed leader in the insurance sector in the Far-Eastern Federal District ranking 4th as far back as 1998 in the field of contributions from voluntary insurance among the regions of the Far East. The contributions of this leading company for the voluntary insurance exceeded by 2.9 times those of the company ranking 5th in the list of leaders, and are 6.1 times as big as those of the company ranking 10th in the same list (see Table 4). A situation when the market is dominated by one or two obvious leaders is typical for all Russian regions. The fact that the majority of today's leaders were among the first ten leaders in the previously reviewed periods is indicative of the market stability. Besides, the ten biggest insurers considered in 2000 include eight companies established before 1993.

Table 4 The largest insurance companies by insurance contributions received in the sector of voluntary insurance, 2000^*

^* The companies are arranged as per amounts of contributions in the sector of voluntary insurance in 2000.

In the period from 1998 through 2000, the rates of development of many Far-Eastern insurance companies have changed (see Oable 5). The most rapid development has been shown by the following companies: "Enerdzhen", "Eayros", "Dalsair". Besides, the maximum increase of contributions in the field of voluntary insurance in absolute value for the last two years has been demonstrated by the following companies: "Nakhodka Ra" (increase of contributions in 2000 came up to RUR163,878 thousand compared to 1998), "Dalstrakhrezerv" (RUR69,996 thousand), "Rosgosstrakh- Far East" (RUR58,978 thousand), "Dalakfes" (RUR47,815 thousand) and "DalZhASI" (RUR43,755 thousand).

Table 5 Insurance companies with a maximum increase in insurance contribution collections in the sector of voluntary insurance (RUR, thnd)

Among the federal companies operating in the Far East, the Voyenno-Strakhovaya (Military Insurance Co.) company (VSK), Promyshlenno-Strakhovaya (Industrial Insurance Co.) company and RISNI company should be mentioned. In this group the greatest contributions have been collected in 1999 by the regional subsidiary of the PSK company. Its contributions amounted to RUR29,228.5 thousand. In 1999, the RISNI company has collected RUR16,004.5 thousand in the Far East, the VSK's quota equaled RUR9,714.3 thousand. Besides, the "Energogarant", "Afes", SEPI companies' sector offices operate here as well. The "Neftepolis" company is very active in insuring oil production. Nevertheless, the federal companies' quota in the contributions of this region is noticeably small.