The fate of the life insurance market due to upcoming regulatory and legislative changes next year is unpredictable, follows from a survey of insurers conducted by the Expert RA rating agency (Vedomosti has it) as part of a market review. Almost a third of the surveyed life insurers found it difficult to give a numerical forecast for 2022. Another third of companies expect the market to grow by 10–20% in 2022. 16% of respondents stated a probable growth of 5–10%, a fifth of companies predict a reduction or stagnation in 2022. “Expert RA” interviewed 22 life insurers – the total market share of respondents in total life insurance premiums was more than 99%.
Over the past few years, the drivers of the life insurance market have been insurance with an investment component – investment and endowment life insurance (LIS and UI). Since 2020, the growth of the market has also been provided by the life insurance of borrowers against the backdrop of rapid growth in consumer lending.
In the nine months of 2021, life insurers collected almost 399.7 billion rubles. premiums – 25% more than for the same period a year ago (320 billion rubles), follows from the data of the All-Russian Union of Insurers (VSS). Insurance premiums for borrowers amounted to RUB 103 billion. and increased by 52% compared to the same period last year. The life insurance increased by 17% to 110.6 billion rubles. And the fees of insurers in ILI increased by 20% compared to last year, amounting to 158.4 billion rubles.
In 2022, serious changes are coming in the field of life insurance – for the most part they relate to the market for life insurance and life insurance.
One of the important changes and the main intrigue for the market is the emergence of a new type of insurance, shared life insurance (DSZH), similar to the European unit-linked one. The Ministry of Finance has already developed a draft law on its regulation; in addition to describing the new product and how it will work, it suggests that with the advent of the DSZh, current types of life insurance with the participation of the insured in investment income will cease to exist. Insurers criticized the department’s draft law, pointing out, in particular, that the proposals of the Ministry of Finance make the DSH uncompetitive in comparison with other investment products and radically change the regulation of the market.
This fall, the State Duma has already adopted in the first reading a bill that introduces testing of citizens when selling life insurance and life insurance.
Despite the growth in premiums for life insurance and life insurance, the Bank of Russia has repeatedly emphasized that these insurances are sold in bad faith – usually banks sell policies and often to financially illiterate clients under the guise of high-yield deposits. In the first nine months of 2021, about 46.1% of complaints against insurers related to life insurance policies, and 14.3% of consumers complained about how life insurance is sold to them. In the first nine months of 2021, 2,400 victims of misselling applied to the Central Bank, which is 14.8% more than in the same period of 2020.
The yield on ILI policies is also often far from higher than the return on deposits or inflation: the average yield on ILI contracts that ended in the first half of 2021 was 5.1% per annum for three-year policies, 4.8% per annum for five-year policies, noted in November Director of the Insurance Market Department of the Central Bank Philip Gabunia. At the same time, 23% of policies showed a zero yield, and 52% of policies showed a yield in the range of 0–5%.
DSJ can become a new driver of market growth and expand investment opportunities for existing and new clients of insurance companies, according to a study by Expert RA. At the same time, how successfully the HOA will be able to compete with existing investment products on the market, such as mutual funds, individual investment accounts, will depend on such parameters as the amount of tax benefits, whether a mass retail client is allowed to invest in HOA, and other factors. . According to the agency, the concept of the emergence of a life insurance policy will still undergo significant changes by the time it is implemented, so they do not make forecasts of its impact on the life insurance market.
According to the forecast of the Expert RA agency, by the end of 2021, compared to 2020, the life insurance market will grow by 21%. Its volume will reach 521 billion rubles. Insurance of borrowers will amount to 135 billion rubles. (+40%), ILI – 220 billion (+20%), life insurance – 160 billion (+10%).
The dynamics of the life insurance market in 2022 will be largely determined by changes in the regulation of the sale of life insurance and life insurance. One of the most important issues on the agenda: with what final parameters will the instruction of the Bank of Russia, which will regulate the sale of DSZH, come into force.
Another equally important factor that determines the direction of the life insurance market is the movement of the key rate, which now stands at 7.5%. Its increase will slow down the growth of types of life insurance related to lending, as well as increase the attractiveness of conservative instruments: debt securities and bank deposits, which will have a restraining effect on the dynamics of life insurance and life insurance.
In 2022, the agency expects a significant slowdown in the growth of the life insurance market – it will grow by about 13% to RUB 590 billion. This is in the absence of serious economic shocks and upheavals, as well as abrupt regulatory changes in the life insurance market. The growth of borrowers’ life insurance, following retail lending, will slow down to 15%, the segment’s volume will amount to 155 billion rubles. HOI and ILI will grow at a moderate pace at the level of 15 and 10%, respectively.
The development of the life insurance market depends on the regulatory changes of the Ministry of Finance and the availability of state guarantees, says Vladimir Chernikov, Director General of Ingosstrakh Life. DSZH, he noted, is designed for a more financially literate client and involves more income against the backdrop of greater risks. In addition, equity insurance risks losing its value at high commissions. This product is not suitable for a mass client, so replacing it with the usual ILI will deprive customers of the opportunity to find a suitable solution based on their knowledge and experience.
The development of housing insurance in the world shows that the task of the Ministry of Finance and the Central Bank is to enable policyholders to solve their problems through accumulative insurance, accepting their responsibility and not shifting it to the state, says Sergey Tsikalyuk, chairman of the board of directors of VSK. An attempt to implement unit-linked in the form of a DSZh policy raises many questions, says a representative of Rosgosstrakh zhizni. Separate concerns are raised by the proposal to turn off additional investment income in the life insurance products, he notes, this could negatively affect the customer value of the product and jeopardize the emerging endowment life insurance market, which the insurance community is now focusing on.
The development of life insurance will also be affected by a decrease in the issuance of consumer loans and preferential mortgages against the backdrop of an increase in the key rate, as well as the increasing withdrawal of the financial market into numbers, says Igor Kobzar, CEO of Savings Life Insurance: offline insurance is sold better than online.