Share on Facebook Share on Twitter Share on Google+ Share on Linkedin In a recent edition of First Monday, host John Weber welcomed Deniese Imoukhuede, Associate Director of Analytics, to discuss the Russian market. With crude oil prices collapsed and the Ruble valuation low, the Central Bank of Russia raised interest rates from 10.5% to 17% in December 2014. And with continuing economic sanctions against Russia putting further pressure on the economy, A.M. Best has a ‘negative’ view on the Russian insurance market. Ms. Imoukhuede says there are two reasons for A.M. Best’s negative outlook for the Russian market. Firstly, the insurance market has been suffering from mis-pricing and weak underwriting from some time. Secondly, Russia’s economy is dependent on commodity pricing. With economic prospects low, major expenditures, such as infrastructure projects etc., will affect the growth in the insurance as well. Russia’s market is highly reliant on international support. Insurers of major infrastructure projects, for instance, require large amounts of capacity. The Russian market, in turn, relies on international reinsurance for that capacity. Currently, Russia is impacted by economic sanctions due to its role in the Ukraine. Should sanctions deepen, A.M. Best is concerned that there would be a further reduction in reinsurance capacity from the international market to support the Russian insurance market. Looking ahead, Ms. Imoukhuede expects Russian insurers will look to Asian markets where there is quality reinsurance capacity available. One negative possibility is a reliance on domestic reinsurers where there is weaker capitalization. Should Russian insurers look to expand into Asia or Africa, they will lack the quality underwriting and value-added services that international reinsurers provide. We’d like to thank A.M. Best for their contribution to our program. If you’d like to see more of the First Monday Series, visit the A.M. Best website.