Hannover Re’s Alexandre Guerassimenko says Russian losses will drive rate increses in the affected programmes
Two major Russian loss events from 2017 have been reinsured within Europe, leading to rate rises on affected treaties, Hannover Re’s Alexandre Guerassimenko told GR in Baden-Baden. He cited two events last year – one a fire, one a flood – as major Russian loss events.
Guerassimenko is the chief underwriter responsible for treaty reinsurance for Hannover Re’s central and eastern European markets, including Russia and its immediate neighbours, Poland and the Baltic states.
“The intense loss activity in 2017 in Russia led to an increase of reinsurance rates in affected programmes and we expect to observe this price improvement during the upcoming renewal season. Here we are speaking about Alrosa loss and Sindika loss,” Guerassimenko told GR in Baden-Baden.
The first of these loss events was a flood within the Mir diamond mine owned by Alrosa in remote Siberian Yakutsk in August last year. Eight workers were killed in the flood, which led to resignations among the mining company’s executives after safety failures were blamed.
The second event was a huge fire at Moscow’s Sindika construction mall in October 2017. Surrounding structures collapsed in the blaze and hundreds of cars exploded in an underground car park.
Guerassimenko suggested Russia’s intended move to a Solvency II type regulatory regime for its insurance market would add to Russian demand for reinsurance.
“Toughening regulation from the Central Bank of the Russian Federation in turn encourages market players in considering reinsurance as a tool for solvency requirements,” Guerassimenko said.
“We expect further growth in reinsurance demand among small- and medium-sized companies to place risks in international market. In addition, some major Russian players will be interested in acquiring higher capacities to get benefit in big industrial tenders,” he continued.
International placements are not easy for Russian insurers with business subject to US and EU sanctions following the annexation of Crimea and proxy war in eastern Ukraine waged by Vladimir Putin’s government.
Russia’s government set up the Russian National Reinsurance Company (RNRC) two years ago, backed by central bank guarantees, to take on domestic reinsurance risks.
“State reinsurer RNRC has a vital role in the market providing capacity for sanctioned risks as well as strives together with the Central Bank of the Russian Federation for more discipline and transparency in the insurance and reinsurance market,” Guerassimenko added.