The Central Bank announced the refusal of the market to create a new reinsurer

Insurance companies "did not find the will" to participate in the creation of a new reinsurer, said Central Bank Deputy Chairman Vladimir Chistyukhin. The creation of a competitor to RNPK became necessary after the withdrawal of foreign players from the Russian market in 2022 Vladimir Chistyukhin

Insurance companies refused to participate in the creation of a new reinsurance company in the Russian market, which could become an alternative to the Russian National Reinsurance Company (RNRC). Vladimir Chistyukhin, First Deputy Chairman of the Central Bank, told journalists about this at the Financial Congress of the Bank of Russia. The need to create such a competitor arose due to sanctions in 2022, when foreign reinsurers refused to work with Russia.

RNRC is a 100% subsidiary of the Central Bank, it was established in 2016 - primarily to reinsure Russian business, which, due to sanctions, is experiencing difficulties in placing risks on international markets. Until 2022, Russian insurers basically placed their risks on the international market anyway - at the end of 2021, 75% of the risks subject to reinsurance were placed there. After the start of the Russian special military operation in Ukraine , a number of foreign insurance companies left Russia or limited their work with Russian business, including Swiss Zurich Insurance Group, Swiss Re, German Allianz, Munich Re, British-American Willis Towers Watson.

“Today, RNPK is a monopoly structure. And she has no alternative. Therefore, we are conducting a dialogue with the insurance market in two directions: first, we said that we are ready to consider various options for the emergence of another alternative structure or several structures on the market, and were even ready to contribute financially to the creation of such a structure. Unfortunately, the insurers did not find understanding for various reasons. They did not have the will to promote this kind of creation of an additional structure, ”said Chistyukhin.

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The insurers abandoned this idea because the new insurer will always be in unequal conditions with RNPK, in particular because the law says that RNPK must participate in every risk, Yevgeny Ufimtsev, president of the All-Russian Union of Insurers, told RBC. “Insurers would invest in a company that couldn't compete. Therefore, if we refuse to fully support the RNPK and create two real market players, then this is one position. But trying to create an alternative to the RNPK, behind which the Bank of Russia stands financially and legally, insurers have no understanding that this insurer will withstand something,” he says.

The regulator raised the issue of creating a new reinsurance structure in August 2022, as the RNPK does not have enough resources, it followed from the document. From the spring of 2022, Russian insurance companies are required by law to transfer 50% of risks to RNPK, before that it was only 10%. In March 2022, the Central Bank had to increase the declared capital of RNPK from 71 billion to 300 billion rubles. At the end of March last year, the director of the corporate relations department of the Central Bank, Elena Kuritsyna, reported that at the moment, the RNPK's capital guaranteed by the Bank of Russia totals 750 billion rubles.

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According to Chistyukhin, RNPK has practically replaced 100% of the capacity of the entire market and reinsures the entire insurance market. “There are isolated cases when someone does not get into the RNPK, and in this sense we see both opportunities for the RNPK and risks,” Chistyukhin specified. He noted that the RNPK cannot refuse to accept the risk, but can only put forward certain conditions for this. The opportunities lie in the fact that the more diversified, non-concentrated risks, the greater the diversification, the more likely it is that RNPK will be stable and some major insured events will not hit the company's financial stability, Chistyukhin explained.

“On the one hand, under the current conditions, RNPK should satisfy all the needs of the insurance market, on the other hand, it should not become unprofitable in the sense that it assumes all losses due to insured events, and, by and large, it has a negative impact on the balance sheet of the Central Bank, and through this - to the budget," Chistyukhin warned.