Russia’s general insurance industry is expected to decline by 14% in 2022 due to the Russia-Ukraine crisis, according to GlobalData’s Global Insurance Database, a leading data, and analytics company.

Economic sanctions imposed by the US government, which will impact around 80% of banking assets, will also have direct ramifications for the insurance industry as many insurers in Russia are part of large banking groups.

Deblina Mitra, Senior Insurance Analyst at GlobalData, comments: “In response to the Russia-Ukraine conflict, GlobalData has revised its forecast for the general insurance market premiums. Prior to the conflict, the forecast was at RUB1.26 trillion ($17.4 billion) in 2022, but the new figure sits around the RUB1.08 trillion ($15.0 billion) mark. We expect forecasts up to at least 2026 will be impacted.”

Mitra points out that not only are some of Russia’s top insurers, including Rosgosstrakh and Sberbank, part of banking groups, but many Russian insurance groups also have a significant presence in other European markets. The sanctions may result in the liquidation of overseas operations—potentially exposing insurers to long-term solvency challenges.

Many international companies operating in Russia across sectors ranging from automotive to oil and gas, and aviation are in the process of exiting Russia. For instance, Shell and BP in the oil sector and BMW and Volkswagen in automotive.

Mitra continues: “The short-term growth outlook for the general insurance industry in Russia looks bleak due to the adverse impact of economic sanctions. Motor, property, trade credit, and marine, aviation, and transit (MAT) insurance are expected to be among the most impacted. However, increased risk volatility is expected to drive demand for political risks, war-risks, and cyber insurance products.”