Russian Insurance Could Increase In Value To $40 billion by 2010

by Stewart Douglas

Story link: Russian Insurance Could Increase In Value To $40 billion by 2010

The valuable Russian insurance market was today forecast to grow to over $40 billion by the end of the decade according to a report published today by Lloyd’s, which will see it maintain growth at a rate of 16% on each year.

According to the report released by Lloyd’s the size of the Russian reinsurance market could be set to grow significantly over the next three years, based on recent year’s growth outcomes and heightened regional economic development, presenting an opportunity for the domestic insurance sector.

At present the Russian reinsurance market at Lloyds is valued at around $100 million, and will have to overcome ’significant’ hurdles in order to achieve its growth rates and increase to the top level value forecast.

Amongst the main ‘hurdles’ identified were a lack of sustainable capitalization for reinsurance purposes, a lack of professional level talent to lead firms, a poor public opinion of the insurance sector and poor transparency in accounting allowing for greater secrecy and doubt, which were set to stand in the way of the market reaching its full potential in the coming years.

A spokesperson for the Lloyd’s report on the future of the Russian reinsurance market said that Russia too has been overhauled in insurance terms since 1991, and the continuing risk mitigation and aggressive growth would help propel the industry to the forefront as a serious potential market.

With Russian reinsurance likely to become more prevalent over the coming years, it remains to be seen whether it can over the hurdles specified in the report released today in order to achieve its growth forecasts.

In relation to poor public opinion, many analysts have presumed it to be more of an uphill struggle particularly given the dynamics of the Russian reinsurance market.