In 2018, the Russian insurance market will grow up by 10.5%. In the medium term, we expect the annual growth rate to accelerate to 11–14%. In our opinion, the insurance market will move ahead of the Russian economy as a whole continuing to outstrip the GDP growth rate by 4–8% (in 2017: by 1.7%).

In the life insurance segment, insurance premium growth rate will go down to 29%. After the boom of 2016–2017, when insurance premiums surged by more than 2.5 times, ACRA expects a significant correction in their growth rate. Our base scenario assumes that the interest to investment life insurance (ILI) will remain but, because the insurance premium is generally paid at the beginning of insurance period of 3–5 years, it will be impossible to maintain the growth rates. On the backdrop of the expected recovery in demand for cars, the auto hull segment may resume its growth in 2018. The segment’s dynamics is dominated largely by the downward trend in the average insurance premium that emerged in 2015. ACRA expects that the average insurance premium will cease to decline in 2018. The increasing number of insurance policies, in turn, will allow the auto insurance segment to show a significant growth (for the first time since 2014). OMTPL and health insurance reforms can significantly affect premiums in those segments.

Expected insurance market growth is positive for credit profiles of insurers, although in certain segments, certain risks may undermine the positive trend. However, the Russian insurance market is far behind most foreign markets, in terms of both insurance service penetration ratio and insurance premium per capita. Market growth potential is still high.