Lutz Bauer

1
Russian Insurance Market Future Forum

• Lutz Bauer
• CEO Emerging Markets, EGI

2
Russian Market holds good potential, but current
Insurance Business Practices need improvement
MACRO ATTRACTIVENESS
MACRO CONSTRAINTS

• Short Term
• Government with solid majority allows
  policymaking and stability
• Access to technology will support open-market
  policy
• Mid Term
• Russia is expected to become the largest retail
  market in Europe
• Positive economic growth and rising middle class
• Decent terms of investment for foreign insurance
  companies

• Short term
• Steep downturn particularly vis-à-vis other BRICs
  
• Stimulus plan not always reaching where needed
• Mid Term
• Institutional reforms necessary
• Administrative burdens, rigorous execution of
  anti-corruption law is key
• Reliance of the economy on huge enterprises and
  commodities and lack of strong SME base

INSURANCE OPPORTUNITIES
INSURANCE THREATS

• Short Term
• Market consolidation
• Flight to Quality
• Mid Term
• Underpenetration, new products
• Direct and alternative distribution channels
• Increased professionalization e.g. certification
  of agents, increased efficiency

• Short Term
• Cash flow underwriting, irrational pricing
• No central customer claims recording
• Increased incidence of fraud
• Mid Term
• Osago regulation leads to need for cross
  subsidies
• Regulatory and legal changes

Note Short term assumed next 1-2 years, mid term
next 3-5 years
3
Intl Insurance Companies in Russia - today it is
about the Short-term, Mid-term, and Long-term

PRE-CRISIS
PRESENT
Priorities Growth and Profitability
Priorities Profitability and Growth
Quality and consistency of intl brand as key
selling points
Values and strength of a global insurance brand
even more desirable to customers
Insurance asset pricing based on extrapolations
of permanent market growth
The right price is elusive
Russia competes vs other markets for resources
and investment
Russia as a hot growth market