According to a new report from Timetric, key sporting, political and economic events are driving growth in the Russian construction industry. This growth is having a highly beneficial knock-on effect for insurance.
The Asia-Pacific Economic Cooperation (APEC) summit held in Vladivostok in 2012 gave the Russian construction industry a boost last year, and the Russian Winter Olympic Games to be held in 2014 is sustaining it. The country’s hosting of the FIFA World Cup in 2018 is also expected to contribute further growth. As a result, there has been a large-scale increase in the capital expenditure on both road and railway construction projects and airport expansions.
Boom in construction means boost for insurance
Federal initiatives to modernise the country's transport system to 2015 are also expected to drive the country’s insurance industry. Such growth will drive the demand for various categories of non-life insurance until 2017, property insurance in particular.
A look at the Russian construction industry in recent years
In 2006, Russia's rapidly growing construction industry was the second most profitable sector in the country’s economy. All construction industry segments, including residential, commercial and infrastructure construction recorded growth until the financial crisis. As a result the demand for property insurance increased. Both the construction industry and property insurance categories declined in 2009, before recovering strongly in 2010.
Potential for growth
The Russian non-life segment recorded growth during 2010 to 2012. However, the segment is relatively underpenetrated when compared to EU and Brazil, Russia, India and China (BRIC countries). In 2012, non-life insurance penetration measured 0.88%, 3.16% in the UK, 1.91% in Germany, 1.07% in Brazil and 1.06% in China. This provides the segment with positive growth potential, especially in categories such as motor hull and residential insurance.
The Timetric report: “Personal Accident and Health Insurance in Russia, Key Trends and Opportunities to 2017” was published on August 2, 2013.