Schemes can be anti-crisis measures for the insurance companies - Expert RA

Schemes can be anti-crisis measures for the insurance companies - Expert RA analysts say the rating agency "Expert RA, the global financial crisis will have on the Russian insurance market, in addition to reducing the demand for insurance, the four specific effect. The effect of cumulative risk. In a falling market will cumulation of market, credit, insurance and institutional risks of insurance companies that will lead to a whole string of bankruptcies among Russian insurers. Their number is projected to Expert RA, in 2010 code drop to 400-450 insurance groups and companies. 1. Market risks associated with fluctuations in market value of assets accepted as covering insurance reserves. 2. Credit risk - the possibility of default of bank facilities investment of insurance companies, reinsurers and other counterparties. 3. Insurance risks arise as a result of errors in determining insurance rates and building insurance reserves. 4. Institutional risks are manifested through the enactment of laws drastically raising unprofitable OSAGO. Feedback effect of the pyramid. In 2007-2008, during the boom car insurance owners of many insurers was established strategy of rapid expansion of the insurance portfolio at the expense of dumping the purpose of eventual sale of the company. The result is a pyramid insurance, payments are made through contributions from new customers. In a falling market paying such companies have already formed an insurance portfolio is guaranteed to exceed the current income. Companies who belittle your insurance rates during the boom, will be insolvent at the time of crisis. The effect of the poor owner. The crisis will have a significant impact on insurance companies that are part of the financial and industrial groups, financial difficulties. FPG, trying to improve their situation will get rid of noncore assets, ie insurance companies. There are two options: 1) An insurance company with good customer base, will be sold to one of the major insurance companies. Thus, in the next year we should expect a new wave of mergers and acquisitions in the Russian insurance market. In this case, the multiplier value of insurance companies will already be well below pre-crisis level. 2) If the company does not sell out, it will be output from the liquid assets, investment insurers again increase the proportion of bills and other organizations. As a result, the reliability of these companies will fall sharply. Such actions of owners can cause bankruptcies of many Russian insurers. The effect of return "schemes." To survive as an anti-crisis measures, some insurance companies may return to more profitable operations, "nonclassical" insurance or increase their share of their insurance portfolios. According to the forecast, "Expert RA" in 2009, their share in total contributions will increase from 10 to 20%. Forecast-2009 is projected to Expert RA, in 2009 the volume of the insurance market to decline by 7.4%. Volume of the Russian insurance market in 2009 will be 520 billion rubles. Figure 1. Dynamics of "schemes" in the Russian insurance market Source: Expert RA "