The Two-Speed Year of Russia's Non-Life Insurance: Kasko Booms, OSAGO Cools and Profits Hide a Currency Wound

The non-life insurance market in Russia spent the first half of 2024 growing at two speeds at once. Premiums across all lines except life insurance rose 10% year on year to more than 800 billion rubles, with the second quarter alone adding almost 430 billion rubles, some 30% above the same period of 2023, according to Bank of Russia data cited by Kommersant. Behind the aggregate, however, kasko motor cover raced ahead on a wave of new car sales and doubled auto lending, while compulsory motor third-party liability insurance, OSAGO, barely moved and even contracted in the second quarter. At the same time the industry's headline profit fell, not because underwriting deteriorated but because currency revaluation erased investment gains. The result is a market whose growth story and profit story point in opposite directions.

A market that accelerated into spring

By the end of June 2024, premiums in all insurance segments other than life had grown 10% against the first half of 2023, crossing the 800 billion ruble mark. The acceleration was concentrated in the spring: second-quarter collections of almost 430 billion rubles ran 30% above the second quarter of the previous year. Vladislav Chezganov, head of the strategic analysis centre at SberStrakhovanie, expected the market to grow 10% over nine months to 1.2 trillion rubles, naming travel insurance with a 30-35% increase, kasko with 20-25%, property insurance of individuals with 12% and OSAGO with 5% as the key drivers of the year.

That forecast itself is a map of the two speeds. The fastest lines are those tied to mobility and to assets people are buying again, while the compulsory line, priced in a fiercely competitive tariff corridor, contributes volume but little momentum. Insurers continued to work on expanding their client base through the half, and the Central Bank noted that companies were widening the pool of insurable risks, for instance by raising the maximum age of cars accepted for kasko and by improving coverage options for right-hand-drive vehicles.

Kasko: the engine of the half

The main driver of the first half, according to the Central Bank, was kasko, where premiums grew by more than 22%. The mechanism was unusually direct. The number of kasko contracts concluded with individuals in the second quarter rose by more than a quarter year on year, following a 70% increase in new car sales in the same quarter and a doubling of auto loans. Because banks typically write kasko into credit agreements as a quasi-mandatory condition, the lending boom converted mechanically into insurance premiums.

Insurers reinforced the trend from their side. Chezganov attributed growth above 20% to a combination of continuing new car sales, rising spare part prices and the popularisation of boxed, pre-packaged programmes. Dmitry Larin, head of the analytics centre at Rosgosstrakh, described the same logic from the tariff side: after several years of steady kasko tariff reductions driven by falling loss ratios and rising competition, the market had, in his words, reached its ceiling, and he expected policy prices to begin rising again, not least because new cars, including increasingly popular electric vehicles, are expensive to service and repair.

Cheap policies keep the average premium down

The composition of demand muted the price signal. Among owners of used cars, the most popular products were inexpensive programmes with a limited set of risks and contracts with deductibles. As a result, the average kasko premium in contracts with individuals stayed low: 20.4 thousand rubles against 19.7 thousand in the first quarter, and roughly 10% below the year-earlier level. Chezganov framed the paradox plainly: kasko grows 20-25% a year against the backdrop of inflation, yet the rising popularity of limited-risk programmes and deductibles holds back the average premium.

OSAGO: flat prices, rising payouts and a camera test ahead

The compulsory line told a different story. OSAGO premiums grew only 4.5% in the first half, and in the second quarter collections actually fell 1.2% against the second quarter of 2023. The average OSAGO premium stood at 7.3 thousand rubles overall and 6.9 thousand for individuals. Chezganov put OSAGO growth for the year at 3-5% and linked it to price competition for the client, expecting the 2024 average premium to remain at the 2023 level.

The pressure, however, sits on the payout side. Analysts at VSK noted that they already see growing pressure on the average payout, driven by the rising cost of spare parts for both new and old vehicle models. In their reading, that pressure must eventually show up both in the spare parts price reference used by the unified loss calculation methodology and in tariff adjustments. Separate Bank of Russia data for the first quarter, published in June 2024, showed the same scissors: OSAGO collections up 5.7% to 72.9 billion rubles while payouts rose 27.8% to 52.3 billion, lifting the loss ratio to 71.7% from 59.3% a year earlier.

The legislative knot

The industry's answer to evasion is technological. Insurers from the National Insurance Information System, Sovcombank Strakhovanie, SberStrakhovanie, the Russian Union of Motor Insurers and Absolut Strakhovanie all backed the initiative to check OSAGO policies with road cameras, with the union pressing the finance ministry, the interior ministry's traffic safety directorate and the Central Bank to accelerate the launch. The obstacle is legal rather than technical: article 12.37 of the administrative code currently allows repeated fines within a single day, so a draft law limiting liability to one penalty per day was prepared and sent for a government review, and the union asked the government apparatus in August 2024 to support it. Absolut Strakhovanie cited the end of 2024 as the implementation horizon, after earlier delays caused by the need to synchronise the union's and the traffic police's databases.

Mid-2024: purchasing power meets the key rate

Analysts at Soglasie described a demand shock arriving in the middle of the year from several directions at once: sharply higher prices for real estate and cars, a higher Central Bank key rate that made credit more expensive, and a strong reduction of state support under preferential mortgage programmes. Together these factors cut purchasing power and, with it, interest in insurance products.

Larin called the effect of high inflation and a high key rate dual. On one side, more expensive auto lending and other credit-linked activity reduces consumer demand and therefore insurance sales. On the other, high deposit rates increase income from investment activity. The same duality runs through the sector's financial result, and it explains why a market growing 10% in premiums can still report a falling bottom line.

Profits: a currency wound over a healthy core

Net profit of the entire insurance market in the first half of 2024 fell 14.9% year on year to 211.1 billion rubles. The Central Bank attributed the decline primarily to worse investment results caused by negative revaluation of currency and financial assets. Excluding life insurance, however, the aggregate net profit of all other lines rose to 166 billion rubles from 152 billion a year earlier, and the regulator stressed that the improvement came mainly from profit on insurance operations.

VSK analysts made the same decomposition: company results are comparable to or worse than last year mainly because of the negative currency revaluation effect against a positive one a year earlier, while excluding the currency component, underwriting results and interest investment income are on average more than 20% above the previous year. Larin added the time dimension: high interest rates raise interest income on reserves in the moment, but in the long run they depress consumer demand and ultimately weigh on insurers' financial results.

Health insurance: reclassification, medical inflation and the employer package

The voluntary health insurance line produced the most dramatic quarterly figure: second-quarter premiums of 95.4 billion rubles against 33.4 billion a year earlier, nearly a tripling. The Central Bank attached two caveats. The comparable quarter of 2023 was openly weak, with collected premiums down almost 30%, and a technical factor mattered: part of the premiums were reclassified into voluntary health insurance from another accounting group, namely inexpensive individual contracts sold through the banking channel.

The structural signal is in the employer segment. Contributions for employers insuring their workers grew 30.1% against the second quarter of 2023, and the number of contracts almost doubled, which the regulator links to employers widening social packages to retain and attract staff in a tight labour market. The average insured amount per person fell sharply, from 15.3 million to 6.9 million rubles, indicating contracts with a narrower set of risks, yet the average premium per person rose almost a quarter, from 4.1 thousand to 5.1 thousand rubles, which the Central Bank explains by rising prices for medical services. Across the whole voluntary health market the average premium moved from 17.0 thousand to 19.3 thousand rubles, up 13.5%.

Larin summarised the pricing rule of the segment: voluntary health insurance grows mainly through medical inflation, because the product is tightly tied to the cost of medical services. Chezganov quantified it: medical inflation reached 9% in the first half and is expected at 10-11% for the year, with voluntary health insurance costs rising at roughly the same pace, while a revival of demand and richer programmes add to the growth.

The segments that shrank and the ones the mortgage rush lifted

Accident and sickness insurance moved in the opposite direction, with premiums down 27%, mainly because of borrower coverage: several financial companies switched to collective insurance schemes from the second half of 2023, and premiums contracted accordingly. Property insurance of individuals showed a quarterly spike of 41% in the second quarter against a modest 11% for the half, and the Central Bank tied the divergence to mortgage-linked cover written in the quarter just before the expiry of the state preferential mortgage programme. Contributions for buildings and household property grew only slightly despite fewer contracts, because the cost of insurance protection increased.

What the market expects next

The expectations voiced by market participants for the remainder of 2024 form a short and internally consistent list:

• Nine-month non-life growth of about 10%, to 1.2 trillion rubles, with travel insurance, kasko, individual property and OSAGO as the drivers.
• A turn in kasko pricing: after years of tariff reduction the market has reached its ceiling, and policy prices are expected to start rising, pushed by repair costs of new and electric cars.
• Flat OSAGO average premiums for 2024 under price competition, with tariff pressure building from the payout side as spare parts costs feed into the unified methodology reference.
• Voluntary health insurance growth tracking medical inflation of 10-11%, supported by employer packages in a labour-short economy.
• Continued contraction of borrower-linked accident coverage as collective schemes replace individual policies.
• Launch of OSAGO checks via road cameras by the end of 2024, conditional on the one-fine-per-day amendment to the administrative code.

How the camera check would actually work

The roundtable Kommersant convened around the camera initiative produced the operational blueprint. Nikolai Galushin, chief executive of the National Insurance Information System, described an algorithm in which policy data are requested several times at intervals, so that even a one-day OSAGO contract is guaranteed to be loaded into the insurance information system before any fine can be issued; the double check of data from the NSIS-operated system is meant to raise verification quality, reduce the risk of fining compliant drivers, strengthen trust in compulsory insurance and increase pressure on those who evade it. Anton Pozhidaev, head of the OSAGO direction at SberStrakhovanie, argued that camera control would deepen the penetration of the line and therefore protect other road users.

The sceptical note came from Sovcombank Strakhovanie: security adviser Andrei Mozerov called a once-per-day fine frequency adequate, but doubted the stimulating effect in non-digitised regions without cameras, where manual checks by police could produce the opposite effect. Evgeny Ufimcev, president of the Russian Union of Motor Insurers, framed the project as the necessary alternative to the check at vehicle registration, which is being abolished next year, and recalled the union's June appeals to the finance ministry, the interior ministry's traffic safety directorate and the Central Bank. Yulia Fedotova of Absolut Strakhovanie tied the control to the higher fine for driving uninsured and to minimising the pool of uninsured vehicles that complicates settlements for victims.

The two-speed logic, summarised

Read together, the half-year data describe a market whose volume growth is credit-driven and whose profit growth is rate-driven, with the two forces pulling in opposite directions. Kasko and mortgage-linked property grow because people are buying cars and apartments with borrowed money; the same borrowing costs, at a high key rate, suppress purchasing power elsewhere and will eventually cool the very lines they now feed. Investment income benefits from the high rate in the moment but carries a currency revaluation risk that can erase a quarter's underwriting progress, as the first half demonstrated.

That is the dual nature of the 2024 growth. The top line accelerates on mobility, travel and employer health packages; the bottom line hides a currency wound over an underwriting core that, by the regulator's and the majors' own decomposition, is healthier than the headline profit suggests. For the second half, the decisive variables are not insurance-specific: the key rate path, car sales and the fate of preferential mortgage programmes will set the speed of both lanes.

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