The document provides an overview and comparison of the insurance markets of Belarus, Kazakhstan, Russia, and Ukraine based on data from the Euro-Asian Insurance Union. It summarizes key metrics and trends for each country from 2000-2010, including GDP growth, inflation, GDP per capita, insurance premiums, penetration rates, and density levels. The markets demonstrate significant growth over the period but still lag developed Western European markets in terms of penetration. Russia has the largest market by premium size while Belarus has the lowest. The document also compares the regional markets to those in Central and Eastern Europe.

1. Insurance Review
of Top Insurance Markets
of the Former USSR
(based upon data of Euro-Asian Insurance Union)
October 2012

2. Annual GDP growth
Belarus Kazakhstan Russia Ukraine
2000
10.0%
13.5%
11.4% 12.1%
0.2% 1.2% -7.8% -14.8%
2009
2010
Over the past decade, all countries of the region demonstrated high GDP growth rates. Until 2020, the regional GDP dynamics
GDP Growth is likely to remain positive: lower than in the previous years, but higher than in developed West European and CEE economies.
The region is likely to be the most dynamically growing part of Europe, with a population of over 200 million people.
The region is highly vulnerable to crises as its economy is dependent on exports of commodities and other goods with low
GDP Growth added value. As the regional infrastructure undergoes reforms, the vulnerability is set to reduce.

3. Annual Inflation, Consumer Prices
Belarus Kazakhstan Russia Ukraine
2001
61.1% 21.5%
11.4%
17.2% 25.2%
7.7% 7.1% 6.9% 9.4%
2010
Over the past decade, the regional economies saw a significant reduction of consumer price inflation. Further decrease is
Inflation likely, as a result of economic reforms aimed at demonopoliszation. If the reforms are successful, by 2020, the regional
inflation is to reduce to 3-5% per year.
High inflation in the previous years constrained development of the regional non-life market and had an extremely negative
Inflation effect on attempts to establish a life insurance market. If the regional inflation drops to 3-5% per year and the inefficient
state social funds are reformed, life insurance will gain momentum.

4. GDP per capita in current prices,
000 USD
Belarus Kazakhstan Russia Ukraine
2000
5.8 9.1 10.4 3.0
2010
Between 2000 and 2011, the regional GDP per capita reached a level high enough to ensure stable development of
GDP per capita insurance market. The trend was particularly visible in Russia and Kazakhstan. Insurance markets of Belarus and Ukraine
are lagging behind, mainly due to their political landscapes.
Although Russia and Kazakhstan demonstrate GDP per capita at levels comparable to those in a number of CEE countries,
GDP per capita the economies are very much dependent on exports. The same is true for Ukraine, although the country’s GDP per capita is
at a lower level. The Belarusian economy is closely tied to Russian, which makes it rather vulnerable.

5. Premium, 000 000 USD
Belarus Kazakhstan Russia Ukraine
2001
672.9 1,354.0 22,367.2 2,554,6
2010
The regional insurance markets vary by size: Russia’s annual premium exceeds $22 billion, in Belarus it is less than $700
Premium million. At the same time, over the past decade, Belarusian insurance premium grew 7.6 times, Ukrainian 8 times, in
Kazakhstan the growth reached 22 times. The Russian insurance market tripled over the period.
At the same time, the regional market development is flawed as it is based on short-term non-life contracts. Currently, the
Premium markets see active development of new non-life segments: crop insurance and casualty insurance among them. All
countries adopted MTPL over the past decade.

6. Penetration, %
Belarus Kazakhstan Russia Ukraine
2001
1.23 0.74 1.21 1.58
2010
The regional penetration level is not only below that demonstrated by developed Western European markets, it also lower than
Penetration that of CEE. The reason for it is the same in all countries of the region: over the past decade the economies grew dynamically
and the currencies depreciated. Besides, as it is clear from the charts, insurance watchdogs in Russia, Kazakhstan and
Ukraine declared war on the so-called tax optimization insurance schemes.
In the next ten years, the regional penetration is likely to grow at a faster pace due to lower GDP growth rates and development
Penetration of new non-life segments. In case the governments launch pension reforms, life insurance may also gain momentum. By the
end of the current decade, penetration levels in the regional insurance markets will reach – and in a number of countries even
exceed – CEE penetration.

7. Density, USD
Belarus Kazakhstan Russia Ukraine
2001
71.0 82.4 156.6 56.0
2010
Regional density levels vary significantly: in Russia it is three times higher than in Ukraine. Such a development is a result
Density of both economic and infrastructural trends. In legislative terms, the Russian market is at a much higher level.
The density level in the Russian insurance market has reached that of CEE markets. If Russia’s inflation rate continues to
Density decrease, development of the life market will start growing at a much faster pace. In other markets of the region, the
legislative base continues to develop, which creates conditions for a very positive growth of life insurance.

8. Comparisons of markets of some
countries of the former USSR to
the rest of Europe

9. European Insurance Markets
Penetration Netherlands
United Kingdom
France
Finland
Switzerland
Portugal Belgium Ireland Denmark
Sweden
Italy
Germany
Slovenia Austria
Spain
Cyprus
Czech Republic Norway
Poland
Slovakia
Croatia
Bulgaria Hungary
Romania Greece
Serbia
Ukraine
Turkey
Russia
Belarus
Kazakhstan Density

10. Insurance Markets of CEE and ex-USSR
Penetration Czech Republic
Croatia
Poland
Hungary
Slovakia
Ukraine
Serbia
Romania
Turkey
Belarus
Russia
Kazakhstan
Density

11. Regional Dynamics in 2002-2011
Penetration
Ukraine
Belarus Russia
Kazakhstan
Density

12. Key Features of Regional
Markets

13. Russia: key features
Current environment
Penetration in Russian non-life market, %
Russia is one of the few sizeable (population of 142
Regulation million), under-developed, yet rapidly growing
economies
3,55
3,17 3,02
2,16 2,11 Insurance sector in Russia remains highly
1,84
1,45 1,45 1,21 underpenetrated with a GWP to GDP ratio of 1.2 in 2011
Penetration
(Western European average of 3.1%). Russian life
insurance market is in its infancy.
Germany Western France Czech Rep. CEE Poland Turkey Romania Russia
Europe
The cap for the foreign capital level in the market has
been increased to 50%. Full switch to the IFRS is set for
Russian Insurance Market, by class Regulation 2013.
MTPL Life
The market is recovering from the crisis and entering a
new development stage. The main growth driver is the
Financial Risks Voluntary
Medical General market motor hull segment, although a significant premium
Liability situation: increase is also recorded in the corporate segment. In
Cargo and
2013-15, if social reforms are successful, we may
others expect a strong growth of private insurance.
The market is consolidating as the weaker players are
Accident leaving the industry. By end-2013, the profitability is
likely to return to the pre-crisis level. The quality of
Competitive
insurance services is also growing. However, the market
environment
Property still demonstrates a strong dependence on sales
channels, primarily in new sales.
Agricultural Venicles
2012 has seen a higher level of domestic M&As. Only
one foreign investor – Liberty Mutual – entered the
M&A
market. 2013-15 is likely to see renewed interest of
foreign investors in Russian insurance.

14. Ukraine: key features
Current environment
Penetration in Ukrainian non-life market, %
Key problems of the market are weak regulation and
Regulation low transparency. The two factors help weak and
captive players to remain in business.
3,55
3,17 3,02
2,16 2,11 Market players continue to engage in grey tax
1,84 1,58 1,45 1,21 optimization schemes; dependence on state financing
Regulation
remains strong. Full switch to the IFRS is expected in
2013-15.
Germany Western France Czech Rep. CEE Poland Ukraine Turkey Romania
Europe
Ukraine demonstrates a relatively high penetration level
compared to other countries of the region, but this is a
Ukrainian Insurance Market, by class Penetration result of Ukraine’s weaker economic recovery. In fact, the
Ukrainian insurance market is less structured than other
regional markets.
Liability Travel
Accident
The market is yet to see full recovery from the crisis, it
Voluntary Medical remains extremely dependent on the banking sales
General market channel. Profitability of local insurers is affected by
Venicles
situation: strong price competition. The main growth drivers are
MTPL and personal insurance, i.e. low profitability lines.
Property 2013-2015 should see further market growth.
The market continues to consolidate. Technical and real
bankruptcies of weaker players are expected in 2012-15
as a significant part of local insurers engage in price
Competitive
dumping. With weaker players leaving the market, we
environment
Life may expect to see quality competition. Companies with
foreign capital (AXA, Uniqa, PZU) are likely to see
capital increases
MTPL
We see no real interest of potential investors in 2012, and
the multiplier in Ukraine is be situated within 0,2-0,8 of
M&A annual premiums. We may expect further foreign
investment inflow in 2013-15 as the market recovers from
the crisis.

15. Kazakhstan: key features
Current environment
Penetration of Kazakhstan non-life market, %
The market demonstrates the strongest and the most concise
Regulation regulatory system in the region, with key norms necessary for
further development already in force – MTPL, casualty, annuity
3,55 and crop insurance norms among them.
3,17 3,02
2,16 2,11 The market has a strong actuarial institute, brokers have
1,84
1,45 1,45 1,21 to undergo licensing. The number of players is limited,
Regulation with weaker companies under surveillance of the
regulator or in run-off. Guarantee funds have been set up.
Germany Western France Czech Rep. CEE Poland Turkey Romania Russia
Europe
Insurance penetration is limited to large cities (Astana
and Almaty), most corporate clients are large industrial
Penetration and financial groups. The market is strongly dependent
Kazakhstan Insurance Market, by class
on the banking sales channel and consumer loans
development.
The growth drivers are compulsory classes, primarily
Voluntary Medical industrial risks. Credit insurance, which is vulnerable to
Venicles
Accident
General market crisis effects, is popular in large cities. In life insurance,
situation: MLM generate a significant part of the total premium.
Agricultural
Property
Financial Risks Competition in the market remains modest, except in
the bancassurance segment. Due to strong regulation
and the key role of large industrial and financial groups,
Competitive
entry to the market is limited and business success is
environment
determined by whether an insurer has access to the
Liability financial groups.
In the next several years, robust M&A activity is unlikely.
MTPL Moreover, it seems that in the local market, a greenfield
Life M&A
Is a good alternative to an acquisition.

16. Belarus: key features
Current environment
Penetration of Belorussian non-life market, %
Although private insurance companies exist, the state takes up a
Regulation significant market share, as government-controlled companies
have the monopoly on compulsory insurance. Recently, the
3,55 government indicated it plans to liberalize the market.
3,17 3,02
2,16 2,11 The market experiences a strong control of the finance
1,84
1,45 1,45 1,21 ministry, which sets the development targets and
Regulation monitors all indicators. Access of foreign insurers is
limited, although some Russian and overseas investors
are present.
Germany Western France Czech Rep. CEE Poland Turkey Romania Russia
Europe
The penetration level is close to that in Russia, but is a
result of strong state control and premiums in
Belorussian Insurance Structure, by class Penetration compulsory corporate classes.
MTPL Life
Key growth drivers are compulsory classes. Voluntary
insurance is underdeveloped due to the low average
Financial Risks Voluntary
Medical General market income ($400 compared to $700 in Russia).
Liability situation:
Cargo and
others
Competition is strong only among privately-owned
Accident insurers, but even there it is lower than in Russia,
Ukraine and Kazakhstan. The role of the banking
Competitive
channel is less important that in other countries of the
environment
Property region. The agency channel is rather more developed
than elsewhere in the region.
Agricultural Venicles
M&A opportunities are limited and depend on the state
policy for foreign investors. The government
M&A
contemplates opening the life segment for overseas
investors.