Volume 11 - Issue 55
/ July 2022
285
https:// www.amazoniainvestiga.info ISSN 2322- 6307
DOI: https://doi.org/10.34069/AI/2022.55.07.30
How to Cite:
Odinokova, T., Kharitonovich, A., Shlekene, E., Yarullin, R., & Shvedova, N. (2022). Assessment of the financial stability of the
Russian life insurance model. Amazonia Investiga, 11(55), 285-296. https://doi.org/10.34069/AI/2022.55.07.30
Assessment of the financial stability of the Russian life insurance
model
Оценка финансовой стабильности российской модели страхования жизни
Received: March 28, 2022 Accepted: July 11, 2022
Written by:
Tatiana Odinokova129
https://orcid.org/0000-0003-2546-2781
Alexander Kharitonovich130
https://orcid.org/0000-0001-9185-4105
Elena Shlekene131
https://orcid.org/0000-0003-2745-7783
Raul Yarullin132
https://orcid.org/0000-0001-6834-3032
Natalya Shvedova133
https://orcid.org/0000-0002-2681-9976
Abstract
Life insurance is one of the effective mechanisms
of protection against social risks. This product
can protect a person in case of disability, provide
medical care, increase cash savings. In Russia, in
the context of a decrease in the financial
capabilities of the state, fragmentation and
unsystematic decision-making in the field of life
insurance regulation, fundamental changes are
being made in the life insurance system. A
natural consequence of this situation was a
downward trend in some indicators of the
development of the Russian life insurance model.
The research purpose is to assess the financial
stability of the life insurance model used in
Russia. As a result of the study, the features of
the Russian life insurance model were revealed
and its strengths and weaknesses, challenges and
threats were identified on the basis of a SWOT
analysis; the main factors influencing the balance
of financial flows of the Russian life insurance
model were identified; an assessment of the
financial stability of the Russian life insurance
model was carried out.
129
PhD in Economics, Associate Professor, Ural State University of Economics, Russia.
130
PhD in Economics, Associate Professor, Saint Petersburg State University of Architecture and Civil Engineering, Russia.
131
PhD in Economics, Associate Professor, Belgorod University of Cooperation, Economics & Law, Russia.
132
Doctor of Economics, Professor, Financial University under the Government of the Russian Federation, Russia.
133
PhD in Law, Associate Professor, Volgograd Academy of the Interior Ministry of Russia, Russia.
286
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Keywords: life insurance, state life insurance,
private life insurance, pension insurance.
Introduction
The modern Russian life insurance model was
developed in the 90s of the 20th century, when the
country entered a period of fundamental market
reforms. The formation of the Russian model is
based on the experience of state compulsory
pension insurance, carried out within the
framework of social insurance, and the
experience of Soviet voluntary life insurance,
provided by the Gosstrakh Insurance Company.
It should also be noted that by the beginning of
the 90s, “70% of the population employed in
production” had long-term life insurance
contracts. (Anikeeva, 2012). Today, 98% of the
Russian population is insured in the state life
insurance system in terms of compulsory pension
insurance, in the private life insurance system –
no more than 15% (Rudometova &
Kartamysheva, 2015).
The Russian experience is interesting in that in
the context of a decrease in the financial
capabilities of the state, fragmentation and
unsystematic decision-making in the field of life
insurance regulation in general, as well as the use
of social non-budgetary funds of the state as an
applied tool for conducting socio-economic
policy, fundamental changes are being made in
the system of the management of these processes.
A natural consequence of this situation was a
downward trend in some indicators of the
development of the Russian life insurance model.
Based on logic, any existing life insurance model
can be transformed or modified over time in
order to ensure balance, thereby acting as a
natural stage in the process of self-organization
and self-structuring of the system (Hemrit &
Nakhli, 2021).
The research purpose is to assess the financial
stability of the life insurance model used in
Russia.
The following objectives should be met to
achieve the purpose:
1) to identify the features of the Russian life
insurance model and, based on a SWOT
analysis, determine its strengths and
weaknesses, challenges and threats in the
context of system integration of its public
and private levels;
2) to determine the main factors affecting the
balance of financial flows of the Russian life
insurance model;
3) to assess the financial stability of the
Russian life insurance model.
Literature Review
Modern people live in a so-called risk society. A
very important point is the search for tools that
can minimize the dangers and threats from the
outside. Life insurance is one of the effective
mechanisms of protection against social risks.
This product can protect a person in case of
disability, provide medical care, increase cash
savings. Life insurance allows insured citizens to
be reimbursed for insurance losses in the event of
an accident, such as illness, injury or death
(Joulfaian, 2014). Insurance helps create a “cash
cushion” in case something happens to a person.
However, other advantages of life insurance can
be identified: the possibility of saving for
planned expenses (treatment or education of
children) (Shi et al, 2015), saving for a future
pension (Faust et al, 2012).
Life insurance is a mechanism by which a person
can plan to continue earning income in the event
of death, disability or old age. Life insurance in
its general sense is used to refer to all forms of
insurance designed to protect against loss of
income due to inability to work, whether due to
death, accident, illness or old age (Valentina-
Daniela & Gheorghe, 2015).
With the undeniable importance of life insurance
as a financial mechanism for the economy and
the population, its possibilities in Russia remain
unclaimed in full. Besides, world practice fully
confirms the great importance of life insurance
functions for national economies.
The global assets of insurance and pension
companies amount to more than 100% of the
total GDP of the countries worldwide (in the
USA – more than 150%, in the UK – more than
200%, in the Netherlands – 300%), while 80% of
insurance assets are concentrated in life
insurance companies. Insurance premiums
amount to 9% for pension insurance and 7.96%
for life insurance in GDP in Germany, 11% and
3% of GDP, respectively – in the USA, 15% and
8% – in the UK. In 2019, the share of life
Odinokova, T., Kharitonovich, A., Shlekene, E., Yarullin, R., Shvedova, N. / Volume 11 - Issue 55: 285-296 / July, 2022
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insurance premiums amounted to 46% of the
total insurance premium worldwide, in the USA
life insurance occupies 26%, in the European
Union – more than 70% of the insurance market.
In European countries, the average premium per
capita in 2019 was EUR 3,110, including EUR
2,695 for life insurance (International
Association of Insurance Supervisors, 2021).
In the Russian Federation, life insurance shows
more limited results, but the prospects for its
growth, taking into account foreign experience,
are significant. Figure 1 shows the dynamics of
the assets of insurance companies specializing in
life insurance, while its total value in the
country’s GDP for the analyzed period increased
by 3.5 times and at the end of 2020 amounted to
7.4% (Central Bank of the Russian Federation,
2021a; Central Bank of the Russian Federation,
2021b).
Figure 1. Dynamics of assets of insurers specializing in life insurance and its total value in GDP
Source: Central Bank of the Russian Federation, 2021a; Central Bank of the Russian Federation, 2021b
The values of the ratio of assets and equity to
insurance premiums among Russian life insurers
have different dynamics, for example, the
Pension Fund of Russia (hereinafter referred to
as “PFR”) have not generated the assets in a
sufficient amount due to the fact that only since
2002 the transition to the funded pension system
began and the use of a forced measure of its
suspension since 2014 (the introduction of a
“moratorium” on pension savings) (Figure 2). In
turn, the short duration of the formation of
pension savings also affected the capitalization
of non-state pension funds (hereinafter referred
to as “NPFs”), showing a downward trend. Life
insurers, on the contrary, showing a wave-like
development trend, began to increase the level of
capitalization since 2016. According to data for
2020, the ratio of the total assets of life insurers
to the premiums received by them was 366.9%,
which corresponds to the same indicator of life
insurers in foreign developed countries in the
early 2000s.
2,09 2,92 3,32
4,41 4,95 5,68 5,48 6,29 6,86 7,02 6,66 6,98 7,68
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
percentage
bn. RUB
Assets of life insurers, bn. RUB
Assets of non-state pension funds, bn. RUB
Assets of the Pension Fund of Russia (value of assets in which the pension savings of management companies are placed),
bn. RUB
Ratio of total assets of life insurers to GDP, %
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Figure 2. Dynamics of the ratio of life insurers’ assets to insurance premiums, %
Source: Central Bank of the Russian Federation, 2021a; Central Bank of the Russian Federation, 2021b
Insurers’ asset growth rates are cyclical, while in
total terms they grow faster than the growth rates
for liabilities, however, the instability of this
dynamics has affected the reduction of equity
capital and, accordingly, the decrease in the level
of insurers’ stability (reliability) in terms of the
ability to cover assumed liabilities at the expense
of own funds.
An economic indicator that makes it possible to
assess the scale of insurers’ activities is insurance
density, which describes the ratio of insurance
premiums to the total population. Figure 3
illustrates the density in the period of 2008-2020.
It is worth mentioning that the density of
insurance, especially in the segment of private
life insurance, has increased significantly since
2012, which is associated with the start of sales
of investment life insurance (“ILI”).
Figure 3. Density of public and private life insurance (insurance premiums per capita), RUB.Source:
Central Bank of the Russian Federation, 2021a; Central Bank of the Russian Federation, 2021b
The ratio of total premiums to GDP, better
known as insurance penetration, is one of the
most commonly used indicators in insurance
performance analysis. As shown in Figure 4, the
penetration of state life insurance is much deeper
than private insurance, which is explained by the
widespread coverage by the compulsory pension
insurance system (hereinafter referred to as
“CPI”) in Russia and rather high insurance rates
set by the state for policyholders. It should also
be noted that in 2008 the share of voluntary life
insurance (hereinafter referred to as “VLI”) in the
total amount of the average premium for private
insurance per capita accounted for 24% (RUB
135.2 out of RUB 563), while by the end of 2020
– already 80% (or RUB 2,934.5 out of RUB
0,0
200,0
400,0
600,0
800,0
1000,0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
percentage
The ratio of assets to insurance premiums (Pension Fund of Russia), %
The ratio of assets to insurance premiums (non-state pension funds), %
The ratio of assets to insurance premiums (life insurers), %
142,7 142,8 142,9
142,9 143,1143,7
146,3 146,5 146,8 146,8 146,9 146,8 146,7
140
141
142
143
144
145
146
147
148
0,0
5000,0
10000,0
15000,0
20000,0
25000,0
30000,0
35000,0
40000,0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
million people
RUB
Average premium per capita (state life insurance), RUB
Average premium per capita (private life insurance), RUB
Population of Russia, million people
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3,680). This indicator suggests that the
population, when investing financial resources, is
not ready to tie them to a specific goal and carry
out financial planning for the long term. At the
beginning of 2000, the population used to easily
enter into 20-30-year life insurance contracts,
while at the end of 2020 the average duration of
the concluded contract was reduced to 10 years
(Central Bank of the Russian Federation, 2021a;
Central Bank of the Russian Federation, 2021b).
igure 4. State and private life insurance penetration, %
Source: Central Bank of the Russian Federation, 2021a; Central Bank of the Russian Federation, 2021b
To identify trends in the life insurance
development, it is more indicative to compare the growth rates of total insurance premiums for life
insurance and GDP (Figure 5).
Figure 5. Dynamics of growth rates of total insurance premiums for life insurance and GDP, %
Source: Central Bank of the Russian Federation, 2021a; Central Bank of the Russian Federation, 2021b
Against the backdrop of a slowdown in the
growth of insurance premiums for state life
insurance, private life insurance began to develop
actively (Figure 6), which was supported, on the
one hand, by the transfer of citizens’ pension
savings by the PFR into trust management of the
NPF, on the other hand, the government’s policy
of stimulating the citizens’ savings in long-term
life insurance policies (in 2009, pension savings
co-financing (“PSC”) programs; the possibility
since 2014 of investing maternity capital or its
part to form a funded pension; introduction of tax
incentives for personal income tax).
0
20000
40000
60000
80000
100000
120000
0,0
1,0
2,0
3,0
4,0
5,0
6,0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
bn. RUB
percentage
The ratio of insurance premiums to GDP (state life insurance), %
Ratio of insurance premiums to GDP (private life insurance), %
GDP, bn. RUB
-10
0
10
20
30
40
50
60
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
percentage
GDP growth rates, %
Growth rates of total insurance premiums for life insurance,
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Figure 6. Dynamics of growth rates of insurance premiums for life insurance in the context of insurance
protection levels, %
Source: Central Bank of the Russian Federation, 2021a; Central Bank of the Russian Federation, 2021b
The dynamics of growth rates of insurance
premiums for private life insurance for the
analyzed period was uneven due to the strong
volatility of macroeconomic indicators. The high
dependence of life insurance on the level of
economic activity and income of the population
and companies affects its pace of development.
Thus, the Russian life insurance model is
characterized by positive development
dynamics, however, these indicators are still
insufficient to speak of a developed life insurance
system in Russia.
Methodology
The article uses traditional methods of analysis:
comparison and synthesis, as well as analytical
and statistical methods to assess the financial
stability of the Russian life insurance model, and
the use of the logical method made it possible to
determine the strategic vision for the further
development of the Russian life insurance model.
The data sources are Global insurance market
report 2021 (International Association of
Insurance Supervisors, 2021), Review of key
indicators of insurers 2020 (Central Bank of the
Russian Federation, 2021a), Review of key
indicators of non-state pension funds 2020
(Central Bank of the Russian Federation, 2021b).
Results and Discussion
As the analysis showed, life insurers in Russia
are currently going through a difficult economic
period, while each of them faces certain
difficulties (Odinokova & Istomina, 2018;
Odinokova, 2019) due to both high dependence
on external factors and the imperfection of
relations between organizations at different
sublevels of life insurance. In addition, sanctions
against Russia (Nusratullin et al, 2021b) and the
COVID-19 pandemic (Nusratullin et al, 2021a)
have a certain negative impact on the
development of the life insurance system.
Assessing the prospects for the development of
the Russian life insurance model requires
identifying its strengths and weaknesses,
opportunities and threats (Table 1).
-10
0
10
20
30
40
50
60
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Growth rates of insurance premiums for state life insurance, %
Growth rates of insurance premiums for private life insurance, %
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Table 1.
Matrix of SWOT-analysis of the Russian life insurance model.
Strengths
Weaknesses
in interesting ,range of insurance services offeredA
its composition and the nature of the process of
relationships with participants in insurance
.relations of partnerships coordinationEstablishment and
and the NPF, within which there is tween the PFRbe
a redistribution of risk and the burden of paying
.pensions to insured persons Consolidation, reorganization, corporatization of
and their inclusion in the national system of NPFs .nsguaranteeing the rights of insured perso ituations in the National Lessons from crisis s
2009, 2014–2008of Economy Formation, functioning and development of the
system of guaranteeing the rights of insured persons Formation and establishment of a corporate
ancegovernance system for NGOs and insur Consolidation of insurance companies specializing
in voluntary life insurance and strengthening
regulation -lobbying of their interests by self
organizations of the Social Insurance Fund ial Development of a system of actuarial and spec
activities ’ol over insurersdepositary contr
Insufficient level of automation and lack of
advanced technologies in the state life
insurance system The disunity of the institutional interests of the
) due to the sPFR, NPFs and life insurers (LI
ongoing institutional reforms inconsistency of
with their requirements ow customer orientation compared to l ’Insurers
developed countries Low efficiency of the life insurance system Persistently high level of operating costs of life
insurers insurance model Undercapitalization of the life High costs of doing business
Opportunities
Threats
Low penetration of private life insurance s pension system and ’Reforming the country
expanding the range of individual pension capital
life both NPFs and(IPC) operators, including
insurers The expediency of equalizing the rights of life
formation and at IPC the ininsurers and NPFs both
the stage of pension payments xpansion of the system of guaranteeing the rights E
of insured persons to voluntary life insurance
contracts Growth of functional and investment attractiveness
of voluntary life insurance products nt of life Increased attention to the developme
and, as a result, strengthening insurance in general
of state participation in the development of private
life insurance und of the Russian Corporatization of the Pension F
Federation
system in terms of the Imbalance of the CPI
collection of insurance premiums and the
payment of pensions to insured persons Ensuring a balanced budget of the PFR through
from the federal budget (or ”injections“transfer
Growth of the transfer dependence of the PFR
ral budget)on the fede Increased burden on the PFR budget due to the
deteriorating demographic situation in the
country and the implementation of the state
policy of generous payments without the
appropriate formation of insurance coverage rces for covering the Limited list of funding sou
PFR budget deficit Volatility of the financial and other markets in
, excessive the country and, as a resultinvestment activities ’requirements for insurers High concentration of organizations in the
voluntary life insurance subsystem Imperfect legislation that allows for insurance
fraud
One of the strong positions of the Russian life
insurance model is the almost formed
infrastructure, which is represented by:
1) firstly, the main insurer – the Pension Fund
of Russia, which provides almost 95%
coverage of Russian citizens through the
introduction and functioning of compulsory
pension insurance in the country and fairly
“generous” conditions for its
implementation both in terms of total
indicators and in terms of the list of
insurance risks and conditions of their
insurance coverage;
2) secondly, private insurers represented by
two types – NPFs and insurance companies
specializing in voluntary life insurance
(hereinafter referred to as “ICLs”), which, as
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part of their activities, supplement the
presented range of insurance services of the
PFR.
However, in the institutional aspect, this model
cannot be unequivocally recognized as effective
due to the imbalance of development (the
advantage of state life insurance), the crisis of
confidence and the high proportion of the
population experiencing problems with the
instability of financial resources (personal
finances).
However, in the institutional aspect, this model
cannot be explicitly recognized as effective due
to the imbalance of development (the advantage
of state life insurance), the crisis of confidence
and the high proportion of the population
experiencing problems with the instability of
financial resources (personal finances).
To assess the influence of various factors on the
life insurance model, the authors will conduct a
correlation-regression analysis. The main factors
affecting the balance of financial flows in the
Russian life insurance model were identified
through the correlation analysis and are shown in
Table 2.
Table 2.
The main factors affecting the balance of financial flows of the Russian life insurance model.
Targeted
object
Factor
rank
Correlation
, %degree
Factor
Correlation
, %degree
Factor
rank
Targeted
object
State life insurance
1
897.
Per capita income of the population,
RUB
988.
2
Private life insurance
2
995.
GDP per capita at purchasing power
, RUBUSDparity in
886.
3
4
593.-
Gini coefficient
092.-
1
5
691.-
n coefficient Income differentiatio
times), (fund ratio
686.-
4
3
793.
Life expectancy, years
385.
5
6
181.
enterprise Financial balance of
performance
285.
6
7
368.-
Consumer Price Index (CPI), %
170.-
7
8
851.-
bn. savings, in personalIncrease
BRU
254.-
8
No
orrelationc
Consumer confidence index, %
No
correlation
For all the factors considered, both for the state
and private levels of the life insurance models,
correlations are the same (direct or inverse one).
The revealed positive correlation indicates a
direct relationship between the change in the
factor and the targeted object (typical for per
capita income of the population, GDP per capita
at purchasing power parity (PPP) in USD, the
financial balance of enterprise performance and
life expectancy upon reaching retirement age).
In turn, a negative correlation indicates an
inverse relationship between the change in the
factor and the targeted object (typical for the Gini
coefficient and income differentiation coefficient
(fund ratio), the consumer price index (inflation)
and the increase in personal savings).
High and noticeable correlation (in the ranking,
the last (6-8) places are the same: direct
correlation – the financial balance of enterprise
performance; inverse correlation – the consumer
price index (CPI) and the increase in personal
savings.
In terms of state life insurance, a very close
relationship is observed in five indicators that are
somehow strongly interconnected, therefore,
they show a relationship in percentage from 91.6
to 97.8% as they decrease: the greatest
dependence on (they react more sensitively to)
per capita income of the population (97.8%), then
on GDP per capita at PPP in USD (95.9%), then
on life expectancy of the population (93.7%),
while the dependence on these factors is direct
(the larger the factor, the higher development rate
of state life insurance). Further, there is an
inverse dependence on the Gini coefficient
(93.5%) and on the income differentiation
coefficient (91.6%) (the higher the indicator, the
lower the indicator of development of state life
insurance). This dependence is due to the fact
that state life insurance, based on the principle of
generational solidarity, is somehow aimed at the
equalizing nature of insurance payments.
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As for the factors under consideration, private
life insurance shows the closest correlation with
the Gini coefficient (inverse correlation) – 92%.
In the second and third places with a high
dependence are the links with per capita income
of the population (88.9%) and GDP per capita at
PPP in USD, respectively, showing a direct
dependence, then in the fourth place is the
income differentiation coefficient (86.6 %), and
it shows inverse correlation. Since the main
insurers in private life insurance are the citizens
themselves, then, as a result, there is also a
greater dependence on their well-being (the Gini
coefficient and per capita income of the
population), which is confirmed by the
correlation analysis.
Thus, state and private life insurance show
dependence on the factors under consideration,
but react differently to them, respectively, this
should be taken into account by the state when
implementing the policy of regulation of this area
of activity.
Based on the analysis conducted, the following
conclusions can be drawn:
The first level (state life insurance) of the life
insurance model
1) is the basis of financial well-being for a
significant part of Russian pensioners;
2) lacks its own sources of financing, as a
result, it has become dependent on support
from the federal budget, “the possibilities of
which are far from limitless” (Sabitova et al,
2015);
3) there are no guarantees to ensure an
acceptable level of pension provision for
insured persons “in an adequate amount”.
According to the Strategy for the Long-Term
Development of the Pension System of the
Russian Federation, by 2030, an old-age
pension equal to 40% of lost earnings will be
considered adequate in the country, and not
lower than 2.5-3 pensioner subsistence
minimums (Decree No. 2425-r, 2012);
4) the accumulative component of the CPI in
the form in which it currently exists does not
have a special impact on the financial
situation of pensioners. The average funded
pension in 2020 was RUB 1,031, and an
urgent pension payment was RUB 1,894
(Pension Fund of the Russian Federation,
2021). Moreover, the variety of payments
from pension savings (funded pension,
fixed-term pension payment, lump sum
payment) allows insurers to apply various
schemes aimed at not assigning a life-long
funded pension to citizens, but paying
pension savings at a time;
5) there is no mechanism to ensure the balance
of financial flows in the event of a situation
where there may be a significant excess of
the amount of funded pension payments in
relation to the total amount of initial pension
contributions and income from investing
pension savings due to the manifestation of
insurance risk that comes with the
uncertainty associated with life expectancy
(survival risk);
due to the imperfection of the legislation and
constant changes made to it, it allows
insurers to level their burden in fulfilling the
liabilities assumed before the insured
persons (for example, a six-month period for
inheriting the amount of the funded
pension);
provides a narrow choice of strategies for
managing the insurance protection of
insured persons in the event of adverse
events in their lives and defines a small list
of tools for investing pension savings;
the second level (private life insurance) shows
better development indicators, however:
1) insufficiently high capitalization of
insurers;
2) strong dependence on external factors;
3) inefficient management with “internal”
risks, as a result, the growth of the
business of ICLs and NPFs is not
accompanied by adequate capital
growth: since 2008, the average ratio of
own funds (equity capital) to liabilities
for the main activity has decreased by
2021 for ICLs from 45 to 12.5% and for
NPFs from 15.7 to 10.8% (Central Bank
of the Russian Federation, 2021b);
4) an insignificant role of pension
payments in the incomes of current
pensioners (the average amount of
insurance payments for NGOs is RUB
3,700, for voluntary pension insurance
in ICLs – RUB 1,300 (Central Bank of
the Russian Federation, 2021b).
Taking into account all of the above, the current
Russian life insurance model is financially
unsustainable, non-transparent and inefficient.
This conclusion is confirmed by an assessment of
the potential and reality of insurance of the most
important risks for the life of the population,
which is summarized in Figure 7.
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Figure 7. Coverage of potential risks by insurance.
Source: author’s calculations
Thus, it can be seen that in Russia the level of
funds allocated in the economy for pensions is
rather low. All comparisons show that the
average world level and the level of economies
with the development similar to the Russian
economy is about 10-11% of GDP, in Russia it
amounts to 7.5% of GDP. Calculations show that
at the current level of income of the population,
in Russia there is no alternative to the mandatory
solidarity pension system in the economy, i.e.
attempts to develop the funded part of the
pension at low wages are not possible.
In addition, the Russian life insurance model
faces the following problems:
− the imperfection of the legislative and
regulatory framework, which allows all its
participants to use the asymmetry of
information;
− low financial literacy and, as a result, the
lack of an insurance culture;
− a significant proportion of the population
with no opportunity to create savings;
− territorial asymmetry of the population’s
standard of living;
− citizens’ inertia, which is expressed in an
indifferent, unresponsive attitude to the
creation of their pension and insurance
savings;
− the lack of desire among many citizens to
financially plan their lives for more than
three years;
− citizens’ paternalistic attitude;
− the lack of a single database among insurers
(PFR, NPFs and life insurers), which would
reflect data on policyholders, insured
persons and beneficiaries;
− high transaction costs for insurers;
− citizens’ low awareness;
− inefficient tax incentives for the population
and organizations to create and manage
savings in long-term insurance policies;
− limiting the insurers’ possibilities in the field
of investment policy;
− distrust of the population not only to NPFs
and life insurers, but also to the PFR;
− low level of customer orientation and quality
of insurance services.
The consequence of the identified problems is
that the interaction of life insurers, NPFs and the
PFR becomes difficult. In addition, there are
various difficulties associated with the
integration of individual business processes into
common operational-strategic contours.
Consequently, such problems do not allow to
fulfill the potential of life insurance in Russia at
the present stage of development.
Conclusions
Under the current conditions, it seems necessary
to develop the Russian life insurance models,
both in terms of its state sub-level by ensuring its
long-term balance of financial flows and the
private sub-level. The existing Russian life
insurance model should guarantee a certain
standard of living for the insured, be transparent,
understandable and preferably profitable.
The strategic vision of the Russian life insurance
model is as follows:
1) currently, the Russian life insurance model
is in the process of transition from the
divergence of state life insurance and private
life insurance and their factorial influence on
each other to system integration, within
which measures are being sought and
The risk of
reducing family
income - 25.2 %
Risk of lack of
financial support
(family,
dependents) -
12.9%
The risk of a low
standard of living
in retirement - 1.6
%
-20,0
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
160,0
180,0
0,0 200,0 400,0 600,0 800,0 1000,0
Current state of insurance
coverage, tn. RUB
Expert assessment of the volume of potential risks, tn. RUB
Volume 11 - Issue 55
/ July 2022
295
https:// www.amazoniainvestiga.info ISSN 2322- 6307
implemented to combine the efforts of its
financial institutions in order to level risks of
participants in the insurance protection
system;
2) the Russian life insurance model is highly
dependent on external factors and, in order
to reduce this dependence it is necessary to
intensify the processes of convergence
between its financial institutions, thereby
achieving greater financial stability and
process stability;
3) the state level of the Russian life insurance
model provides protection against the risks
associated with reaching retirement age,
establishing disability and the death of the
insured person; in this regard, other risks
associated with the life cycle remain the
responsibility of the insured person;
4) despite the ongoing measures within the
framework of the pension reform and due to
their weak efficiency, the state level of the
life insurance model will continue to follow
the inertial development scenario;
5) private life insurance, within which non-
state pension funds and life insurers carry
out their activities, is a small but the fastest
growing level of the Russian model;
6) the instability of internal processes
introduces a certain instability into the
model, which, being in balance, does not
have a safety margin, since any small shock
may upset the balance, which will eventually
lead to the destruction of the system as such;
7) the weakness of intra-system relationships
due to the negative attitude of a fairly large
proportion of the population towards NPFs
and life insurers does not contribute to their
goals in providing comprehensive insurance
protection for the population, which, along
with low financial literacy of citizens,
weakens the potential of society;
8) the low efficiency of some elements of the
Russian life insurance model does not make
it possible to turn it into a strategically
important sector of the Russian economy,
which ensures an increase in the economic
stability of society, an increase in the social
protection of citizens and a decrease in
social tension in society through effective
insurance protection of the property interests
of citizens and business entities, attracting
investment resources to the country’s
economy.
As the analysis has shown, currently each level
of the Russian life insurance model functions
separately and it is often reflected in the
duplication of operations and competition for a
solvent client. In such relationships, in order to
“survive”, both segments seek to draw over the
financial resources of enterprises and citizens,
while not always being interested in the party
(the insured person) in whose interests they act.
It is necessary to use an integrated approach to
addressing life insurance issues in the process of
human capital reproduction, which involves
coordinating the processes related to cash flows
at different levels and having one goal – to
increase the duration and improve the quality of
life of the Russian population, while these
processes are not possible without active
participation of its main participant – an
individual whose interests are protected by the
actions of the mentioned insurers.
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