The Russian insurance market appears ready for steady growth in the next five to 10 years according to a report by Standard & Poor’s.
The announcement comes after last month’s upgrade of S&P’s long-term local and foreign currency issuer credit ratings for the Russian Federation (B/Stable/B) and the feeling that the market will be available to Western insurers after German-owned Allianz’s decision to take a 45 percent stake in the Russian insurer Rosno.
Upgrading the ratings on Russia may also contribute to enticing foreign insurers to the market and further the development of its insurance sector. According to Ashley Gill, an associate in S&P’s Financial Services Group, foreign investment is very important and has delivered market stability in a number of other central and eastern European countries. The stabilization of Russia’s economy and an increased foreign presence may also help pave the way for liberalization.
If foreign insurers are successful in opening the market, a bonanza awaits them.
The normal Russian spent $25 on insurance two years ago, compared with $117 in Poland. In contrast to an EU average of $1,800 there is much room for growth. Gill adds that the Russian market potentially could be worth more than EUR200 billion if insurance spending levels reach those of Western Europe.
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