The widespread use of life insurance in the Russian Federation is hindered by the high prices for such policies from domestic insurers. This is stated in a study by the life insurance agency ACRA. So, for example, a policy for 20 years with coverage of the risk of death for any reason and an insured amount of 5 million rubles. a 50-year-old man working in a Moscow office will cost 10.4 thousand rubles. per month (tariff – 2.5% of the insured amount per year). For an office worker in New York of the same age, a policy for 20 years with an insured amount four times higher – $ 250,000 – will cost three times less: $ 44 per month (tariff – 0.2%).
The most popular life protection product in Russia is the insurance of borrowers – more than 6 million insured persons. For other types of life insurance, at the end of 2020, only 4.2 million people were insured, that is, less than 3% of the population. In the United States, according to the Insurance Information Institute, about 54% of residents are protected by life insurance. In the world, on average, the collections of life insurers in the last five years have amounted to 3.3–3.5% of GDP, in the Russian Federation in 2020 – only 0.4% (430.5 billion rubles of premiums).
Banks, the main sales channel, play a significant role in the pricing of Russian insurers. Their commissions on credit life insurance are over 50% of the price of the policy being sold. “The low penetration rate of life insurance, the virtual absence of risk life insurance and high rates make the Russian market potentially interesting for foreign insurers,” ACRA analysts note.
As a reminder, from August 22, branches of foreign companies will be able to operate on the Russian market under an agreement on Russia’s accession to the WTO. But, as the authors of the study clarify, political risks and regulatory requirements are holding back the expansion of foreign companies. “According to our information, so far none of the significant foreign players have announced their desire to enter the Russian market in the form of a branch,” notes ACRA. “also indicates a lack of significant interest on the part of foreigners.” Thus, one cannot count on a reduction in tariffs due to competition between Russian insurers and foreign citizens.