Photo: Ruslan Shamukov/TASS

The motor insurance market will shrink at the end of the year - for the first time since the crisis of 2009. Drivers save on policies, which become more expensive along with cars and spare parts.

They don’t buy or insure

In their study “The Future of the Insurance Market: Seizing Opportunities,” analysts from the RAEX rating agency, led by Natalya Danzurun, write that the volume of insurance premiums for comprehensive insurance (payment received by insurers for policies) will decrease in 2015 compared to 2014 by 17.5% , or approximately 40 billion rubles.

In 2009, the comprehensive insurance market decreased by 18%, from 168 to 138 billion rubles. After that, for five years it grew from 3 to 25% annually. The volume of premiums for comprehensive insurance in January-June 2015 compared to the same period in 2014 decreased by 13.9%, or by 14.5 billion rubles.

At the end of the first half of 2015, clients bought 638.7 thousand, or 25.3%, less insurance than in the first half of 2014. At the end of the year, the number of new policies will decrease even more significantly, says Managing Director for Insurance Ratings Alexey Yanin: by 30%, or by 1.6 million.

The main growth driver for the motor insurance market has always been sales of new cars. Now they are declining: according to the Association of European Businesses, over ten months, sales of passenger cars and light commercial vehicles in Russia decreased by 33.6%, to 1.3 million.

The comprehensive insurance market is shrinking due to the economic crisis, says Dmitry Kuznetsov, director of the underwriting and product management department of Soglasie Insurance Company. Incomes of the population are decreasing, which means that clients are reducing their costs, including by refusing to insure their cars under comprehensive insurance, he adds.

Previously, clients insured their car for the entire warranty period (an average of three years), but now they either completely refuse a comprehensive insurance policy for the second and third years, or purchase truncated and, accordingly, cheaper insurance options, says Deputy General Director of VTB Insurance Sergey Konkin.

The price has increased

The actions of the insurers themselves also led to a reduction in the comprehensive insurance market - during 2014 and 2015 they systematically increased the tariff for this type of insurance. Some car owners refuse comprehensive insurance precisely because of rising costs, RAEX analysts point out.

Insurance companies began to raise the cost of the policy after the unprofitability of this type of insurance increased, RAEX analysts indicate. The loss ratio increased due to the devaluation of the ruble, which led to an increase in the cost of auto parts. “Many insurers have begun to reorganize their portfolio, setting prohibitively high rates for the most unprofitable brands of cars and categories of drivers,” analysts write.

The average insurance premium for auto hull insurance for the first half of 2015 was 47.7 thousand rubles, and for 2014 - 41.9 thousand rubles. (an increase of almost 14%).

In 2014, insurance companies raised the comprehensive insurance tariff by 5–50%, and policies for some cars increased in price by 150%. The price of comprehensive insurance for foreign cars has increased the most: for example, for owners of premium foreign cars it could double, an employee of one of the largest insurers previously told RBC. In 2015, insurance companies continued to increase comprehensive insurance rates: Ingosstrakh - by 17%, SOGAZ - by 10-30% depending on the make and model of the car, MAX - by 20-40% for some cars, Renaissance Insurance - by 15%, Intach Insurance - by 15–25%, ERGO - within 5% and so on.

But even if the insurance company did not increase the tariff, the cost of a comprehensive insurance policy for the consumer still increased by about 30–40% due to an increase in the cost of the cars themselves, adds Ilya Grigoriev, head of the underwriting department of AlfaStrakhovanie.

How to reduce the price

To support the population's demand for comprehensive insurance, insurers must reduce the cost of the policy, company representatives interviewed by RBC agree. Insurers are ready to offer cheaper insurance, but under new conditions. “We understand that the cost of comprehensive insurance has become high for motorists,” says Grigoriev. “Clients want to give up various additional options and extended coverage to optimize cost, and want to renew policies at a discount.”

More active sales of insurance products with a franchise (the agreement stipulates that the driver repairs his car himself if the damage is less than a certain amount) can help the comprehensive insurance market, says Damir Aksyanov, deputy chairman of the board of SOGAZ. “Until recently, they were not very popular either with insurers or with motorists. However, with rising tariffs, interest in such products has increased. In SOGAZ, over the nine months of 2015, the share of contracts with a franchise increased by 3.3 times compared to the same period in 2014, exceeding 11% of the total number of motor insurance policies sold,” he says.

Products with a franchise allow you to reduce the cost of a motor insurance policy by sharing risks between the insurer and the policyholder, explain RAEX analysts. The distribution of products with a franchise is beneficial both to insurers - the number of insurance cases is usually reduced due to increased attentiveness of policyholders, who bear part of the risks - and to policyholders, because the cost of insurance protection is reduced, while large losses that can cause a serious blow to the financial condition of the policyholder covered by the insurer, they write.

The development of so-called smart insurance can also reduce the cost of a policy. When concluding such an agreement, the insurance company sets a tariff depending on the driving quality of each individual policyholder: that is, the more careful the driver, the lower the cost of motor insurance for him. This allows you to save up to 55% of the cost of a classic product, says Grigoriev.

RBC was told about the growing popularity of comprehensive insurance with telematics (satellite monitoring of transport) in AlfaStrakhovanie, Liberty Insurance and Intouch Insurance, and some insurance companies are completely reorienting their business to such products. “Today, the share of comprehensive insurance with telematics in our motor insurance portfolio has already exceeded 50%. Next year it should already amount to about 70% of all comprehensive insurance sold by us,” says Valeria Skorokhodova, general director of Independence Insurance Company.

If insurance companies are able to expand their product line, then customer demand will increase, and the market will resume annual growth of 5–10%, RAEX analysts believe.

Not life, but comprehensive insurance