INFOGRAPHICS – Whether in Russia or Ukraine, the insurance sector is relatively underdeveloped compared to the size of the two countries.
Thursday, February 24, the Russian Federation launched an offensive on Ukraine. Asked about this conflict, Thomas Buberl, his managing director of Axa had minimized the repercussions on his group. Beyond the fact that the company had ceded its activities in Russia, it turns out that insurance is not very developed there in view of the size of the country. Same observation for Ukraine.
Less than 20 billion euros in premiums
Thus, insurance activity in Russia represents approximately 18 billion euros at the end of 2020. A relatively low figure in view of the 146 million inhabitants of the Federation, i.e. an average premium of 123 euros per inhabitant. By way of comparison, the French market weighs 296 billion euros, or 16 times more for half the population. The Russian insurance market is still young. Until 1988, it was a state monopoly. The country was then crossed by a long period of financial instability in the 1990s. From 2003, car insurance began to really develop, with civil liability becoming compulsory.
On the Ukrainian side, the insurance market weighed around 1.3 billion euros as of December 31, 2020, for a country with just over 41 million inhabitants. That is an average premium of 32 euros.
Both in Ukraine and in Russia, the insurance markets are mainly oriented towards non-life insurance. In the first case, it represents 91.2% of the premiums collected. In Russia, life insurance is a little more developed with 28% of the activity. By way of comparison, at the global level, the distribution is almost balanced with 44% in life insurance and 56% in non-life insurance.
Two highly concentrated markets
In Russia, the insurance market is largely dominated by Sogaz, launched in 1993 by Gazprom. The company concentrates some 18.67% of the market, far ahead of Alfa Assurance (7.47%) and Réso-Garantia (7.04%). Axa had acquired some 36.7% of the capital of Réso-Garantia in 2008. The French insurer had for a time considered taking a majority stake, but had finally given up in 2011. On the occasion of the presentation of the annual results, the financial director of the Axa group, estimated the exposure in Russia of the company to 200M euros.
In Ukraine, Arx and Unika share the first two places in the market with respectively 9.4% and 8.8% market share. Arx is the former Axa Insurance. The group was established in Ukraine in 2007. It sold all of its activities to the Canadian insurer Fairfax, which then chose to rename the insurer Arx. Unika is a subsidiary of the Austrian group Uniqa.
Note that on December 31, Russia had 157 registered insurance companies. They were nearly 3,000 in 1996. 13 mutual insurance companies and 4 reinsurers complete this panorama.