"Unanticipated outcomes for the regulatory measure"
The life insurance market in Russia has been on a steady growth trajectory, year after year. This growth is driven by a host of new regulations and products designed to protect consumers, promote competition, and make insurance more accessible.
One of the primary focuses of regulation in the life insurance market is the protection of clients' interests and the combating of unscrupulous practices. Regulations set conditions for contracts, aiming to safeguard consumers, yet these measures can sometimes limit their ability to purchase certain products.
Russian regulatory authorities have taken steps to enhance competition in the life insurance and investment products market. By implementing regulatory frameworks that facilitate market access, promote transparency, and reduce entry barriers, they hope to encourage competition between insurance companies, banks, and brokers. While specific details are not widely available, these measures are expected to bring about a more dynamic and competitive market.
One such product that has recently been introduced is DSH, which allows for the expansion of unit-linked products and is available to all clients. Insurance with calculated yield and a wider range of more complex instruments, however, will be available only to qualified investors. This tiered approach aims to cater to different client needs and investment capabilities.
Another significant development is the service component of classic life insurance products, which now includes an option for long-term care for the insured. This addition provides peace of mind for policyholders, knowing that they will be taken care of in their later years.
The tax benefit for unit-linked and income-oriented life insurance will no longer be available from 2025. However, clients may pay more attention to the tax incentive on contributions, with a new deduction of 400,000 rubles per year for IIS, PDS, and life insurance contributions. This change is intended to minimise arbitrage between players on adjacent markets and establish a balance.
The discussion on stimulating competition and increasing the competitiveness of insurers should include the possibility of insurers participating in the long-term savings program. With insurers having extensive experience in offering long-term insurance products and well-developed sales channels, such as agency and partnership, their involvement could boost sales significantly.
Insurers have been allowed to sell DSH since 2025, but collections for this product are currently low due to heavy regulation. The product requires time for testing at all stages of its life cycle and correct identification of the target audience. Despite these challenges, sales of DSH are expected to increase from 2026.
A fixed-income NSS product has recently been introduced in UL and IL, making insurance more affordable for older clients with deferred payout. This product, along with the growing popularity of products with the maximum investment portion in IJS, typically purchased by more affluent clients, indicates a shift towards more diverse insurance offerings.
As the life insurance market in Russia continues to evolve, it's clear that regulations and products are playing a crucial role in shaping its future. With a focus on protection, competition, and accessibility, the market is poised for continued growth and innovation.
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