All-Russia Conference on Reinsurance

8th All-Russia Conference on Reinsurance: The Reinsurance Market of Russia: New Realities

March 2004, Moscow, Russian Academy of Public Service under the President of the Russian Federation

In March 2004, the Reinsurance Committee of the All-Russian Insurance Association held the 8th All-Russia Conference on Reinsurance: The Reinsurance Market of Russia: New Realities.

Organizational and technical support to the conference was provided by the Educational and Methodological Center for Personnel Training (recently reorganized into Business Character Group).

The conference was attended by 299 executives and specialists of 201 insurance, reinsurance, broker and consulting companies from 14 countries and representatives of legislative and executive branches of state, media and non-government organizations.

As pointed out by the participants, the reinsurance market has got through a rather difficult period after a new version of the Insurance Law took effect. They also discussed a burning issue: that of obvious inconformity of the Russian legislation with the international customary business practices in reinsurance and specific measures that could be taken to address this situation.

They emphasized that although the services of Russian reinsurance are cheaper than similar services in the West, further progress of the Russian reinsurance market is hampered by imperfect legal framework and legal usage.

The participants pointed out that, given new legislative requirements for Russian reinsurers, more risks (at least, for a while) will be ceded to the so-called far abroad. The opportunities for spreading the CIS nations' risks in Russia will dwindle, with some 20% of business going away to the West. Hence, the progress of Russian reinsurance will slow down, together with the nation's investment resources.

The participants also discussed the problems relevant to ceding risks to the West. These include high prices for reinsurance coverage, the many times reduced capacity, and the extremely exacting, in fact, tough underwriting when it comes to Russian risks.

Also noted were adverse trends within the CIS reinsurance area after tax and other administrative barriers were built in CIS countries against risk reinsurance by foreign reinsurers, including setting specific requirements for foreign reinsurers as regards their ratings (usually, international ones). The participants emphasized that since insurance businesses in CIS countries cannot expect to be given the required international ratings so far (one reason is that such countries' own ratings are still low), they are, in fact, excluded from the reinsurer lists. This is notwithstanding the fact that numerous CIS companies have provided risk reinsurance services to each other for good 12 years now.

The conference participants proposed the ways to improve the activity of the All-Russia Union of Insurers and its Reinsurance Committee, and discussed the ethics standards applicable to relations on the reinsurance market of Russia.