Ingosstrakh opens in Kyiv; eyes growing insurance market
Encouraged by the development of Ukraine’s national insurance market, one of Russia’s largest insurance companies, Ingosstrakh, has opened a representative office in Kyiv to expand its business in the country.
Ingosstrakh’s general director, Vyacheslav Scherbakov, said his firm intends to boost its reinsurance business in Ukraine. Scherbakov said the company is planning to increase both the number of customers it reinsures and diversify the products offered to existing clients. He said the firm has no plans to get involved in direct insurance in the near future.
Ingosstrakh reinsures risks for ten Ukrainian insurance companies and owns a 20 percent stake in Ostra-Kiev, a large insurer.
Vadym Horenko, head of the company’s representative office in Kyiv, said that Ingosstrakh would eventually enter the insurance market in Ukraine by either establishing a subsidiary or buying a majority stake in a local firm.
Scherbakov said that the market’s vast potential and growing economy prompted Ingosstrakh to expand.
“The Ukrainian market has some of the highest potential of any in the CIS,” he said. “The insurance and reinsurance market here corresponds to our specialties.” The market’s most developed segments include property and liability insurance, he said.
Horenko said that Ingosstrakh accounts for almost 10 percent of all the risk Ukrainian firms reinsure abroad. He said that amounts to between $4 million and $5 million a year.
Horenko said that the representative office’s goal is to increase that market share.
“At the moment, there are 340 insurance companies registered in Ukraine. About 60 of them are interesting for Ingosstrakh in terms of partnership,” he said.
He said the firm should be able to attract new customers due to its reputation and current market trends.
“There are few Russian companies working on the CIS reinsurance market, among which Ingosstrakh is the biggest due to the strong reinsurance of its risks abroad,” he said. “Besides, Ingosstrakh is well-known. It has a good reputation and high ratings.”
Founded in 1947, Ingosstrakh provided insurance for the foreign business of Soviet, and now Russian, companies. The firm has a dominant position in the marine insurance market, providing insurance for 2,000 vessels and 15 Ukrainian shipping companies. The firm also insures cargo and property for Ukrainian companies. Last year, Ingosstrakh collected $400 million in premiums, topping all segments of the Russian market, except for life insurance. The company has 11 subsidiaries in the former Soviet Union and 18 offices outside the CIS. The company insures 16,000 businesses and 1 million individuals.
He said interest in the Russian reinsurance market began increasing after Western companies raised prices following Sept. 11. Floods in Eastern Europe last year also contributed to primary insurers’ interest in reinsurance.
“The inflow of reinsurance from the West to Russia was very clear last year. In 2002, Russian insurance companies collected $10 billion in insurance premiums. This market is rapidly growing, but prices are much lower then in the West,” Horenko said. “That is why Ukrainian companies increasingly are reinsuring their risks in Russia.”
“Besides, economic improvements in Ukraine attract Russian capital, and Russian companies working in Ukraine prefer to be reinsured in Russia,” he said.
Scherbakov said that Ingosstrakh would bring new products to Ukrainian firms, including insurance for export loans, insurance for loss of corporate information and a package of offers for banks.
“Though the Ukrainian market is 3 to 5 years behind the Russian market, it is becoming more active,” said Ingosstrakh spokesman Aleksei Zubets. “It requires complicated insurance products that few firms here can offer. For Ingosstrakh, meanwhile, they are a common practice.”
In 2002, Ukrainian insurance companies collected Hr 4.4 billion in premiums, 47 percent more than a year before.
Insurance companies often place some of the risks they insure with reinsurance companies to diversify their risks and limit their exposure to large, unforeseen losses.
