A major insurer OSAGO risks not coping with obligations

The company does not have enough reserves for future payments for OSAGO. Experts gloomily predict the Russian insurance market turmoil.
The National Insurance Group (NNS) of Rosenergo may face a delay or failure to fulfill part of its obligations, it follows from the company's actuarial conclusion for 2017. This is likely in case of sharp fluctuations in loss and deterioration of the economic situation, as it will entail "even greater problems with liquidity" , follows from the document.

Compulsory actuarial valuation revealed the main problem of the company - the continuing growth of unprofitability for OSAGO, which accounts for 82% of Rosenergo's business. The company for the year 2017 greatly increased its business in OSAGO, its fees increased by more than 80% - to 5.2 billion rubles. As a result, the group took the 12th place in this type of insurance, according to the Central Bank.

The company's fees in 2017 amounted to 6.3 billion rubles., Net profit under IFRS - 499 million rubles., Follows from its accounts. The requests of Vedomosti in the NSG Rosenergo remained unanswered.

 The rules of the Russian Union of Auto Insurers do not provide for restrictions in the issuance of forms of MTPL policies when there is a lack of reserves from a particular company, says his representative. The Central Bank does not comment on the operating companies.

"A large share of MTPL in the portfolio carries a threat to the financial state of the organization, as well as increases the supervisory risks," the actuary writes. He advises the company to diversify the portfolio in favor of low-value types of insurance, significantly reduce the share of OSAGO policies sold through the "Single Agent" system (insurers sell each other's policies in problem regions). In 2017 in the portfolio of OSAGO, the share sold through the "Single agent" policies accounted for 5% of premiums, but for the year the share increased from 1 to 9%, he adds.

 Comparing the assets and liabilities by maturity, the actuary revealed a "liquidity gap by the period from year to year" and advised Rosenergo to study the possibility of redistribution of assets to eliminate this gap, the conclusion follows.

The aggregate liquidity gap on the horizon above the year was almost 160 million rubles., Alexei Yanin, managing director for insurance and investment ratings, Expert RA, estimated. Also, there was a shortage of the unearned premium reserve (reserves for future payments) - 30.6 million rubles. at the end of the year, he adds: "This in itself is not a violation of standards, but can serve as a signal that there may be difficulties in meeting regulatory requirements."

The document on the website of the Rosgidransgaz NSG notes that it is a participant in the holding company Rosenergo, which is called a multi-profile business structure that combines insurance, tourism and agribusiness, which participates in its own funds in implementing four federal programs and engaged in health tourism, housing construction and rural economy. The main owner (over 89%) - Gennady Maryin, follows from the documents on the insurer's website.

 Insurance case

"Rosgosstrakh" due to compulsory motor TPL insurance in 2015 for the first time received a loss, by 2017 it rose to 55.6 billion rubles. The company reduced its share in compulsory motor third party liability insurance from almost 40% to 10%. In April 2015 SK Severnaya Kazna, which occupied the 14th place in the compulsory motor third party liability insurance levy, was deprived of a license, including for violations of solvency requirements.

"RESO-guarantee" in the report for 2016 warned that it can refuse MTPL if the situation continues to worsen. "VTB insurance" in February 2017 transferred the portfolio of OSAGO to VSK, explaining this "uncertainty in the market." IC "Alliance" because of the impossibility to control the loss of OSAGO in the regions in July 2016 refused the license. In October 2017, the Uralsib SG refused to take OSAGO.

Insurers expect that in 2018, due to the unprofitability of this business, two to five players out of the top 20 can leave the OSAGO market, the annual review of the insurance market of the audit and research company KPMG says.

Small players are already starting to leave: in 2017, 11 companies left the compulsory motor insurance market, the survey notes.

"More than half of the survey participants expect that this year OSAGO market will leave no more than two players from the top 20, the rest are of the opinion that the number of such companies will be from three to five," the report says.

According to KPMG respondents, the loss ratio of compulsory motor TPL insurance in 2018 will increase to a record level of 92%. In 2017, it was expected at 84%, but the actual loss ratio was higher due to the introduction of a "single agent" of OSAGO (system sales of policies in problem regions by all insurers of the country - TASS comment) and mandatory sales of policies via the Internet, the study said.

According to insurers, the introduction of a "single agent" increased the loss in 2017 by 11.8% (expected to be 6.7%), mandatory sales of electronic policies by 9.6% (projected to 6.7%).

The introduction of a natural compensation in OSAGO (repair instead of cash payment) increased the loss ratio by 3.2% (it was expected by 7.5%), surveyed insurers say. At the same time, last year's fears of companies about the emergence of new methods of fraud associated with in-kind compensation were not justified.

"Moreover, one-third of the insurers surveyed believe that this measure resulted in a decrease in loss ratio," the report says. In particular, as the vice-president of Rosgosstrakh, the head of the auto insurance block Dmitry Pursanov, told TASS, 65% of the payments to customers are made in the form of repairs, and this, in particular, helped Rosgosstrakh to get out of the record losses received because of OSAGO .
Reduction of payments

In 2018, payments for OSAGO are reduced - due to the fight against fraud and the introduction of a natural compensation, noted earlier in the Russian Union of Motor Insurers. In January-May, payments decreased by 32%, to 57.09 billion rubles. The premiums decreased by 1%, to 89.68 billion rubles.

Top 20 insurers of OSAGO for the first quarter of 2018, according to the Central Bank: RESO-Garantiya, AlfaStrakhovanie, VSK, Ingosstrakh, Rosgosstrakh, Sogaz, MAKS, NSG-Rosenergo, Renaissance Insurance, ASKO- Insurance "(formerly Yuzhural-ASKO), NASCO, Yugoria, Energogarant, Nadezhda, Sterkh, Diamant (license suspended), Zetta Insurance, Service Reserve, Volga insurance alliance.