In Russia, a preconceived attitude towards insurance has developed. Policies are generally issued only when the bank requires it, for example, when buying an apartment on a mortgage or a car on credit. Unfortunately, because of this, people themselves deprive themselves of the opportunity to save money and nerves. Sergei Katargin, General Director of Independent Insurance Consultants and founder of the Onkostrakhovanie.rf project, talks about the most popular and unpopular types of insurance in Russia.
3 most popular types of insurance
1. Life insurance
In 2018, life insurance premiums accounted for 30.58% of the total volume of the insurance market, this is the most common type of insurance in our country. Basically, clients buy policies because without this it is impossible to get money on credit, or the conditions for obtaining are unprofitable without insurance. But there is another reason: banks sell investment life insurance policies under the guise of regular deposits. As a rule, in such cases the insurance company belongs to the same group as the bank.
Banks require a life insurance contract when concluding a loan agreement. This is an optional condition, but when the insurance is canceled, the percentage most often increases, especially in the case of a mortgage. Banks receive commissions for selling insurance products, which is why they insist so much on the client buying the policy.
But there are other, optional insurance programs that you may find helpful. For example, endowment or investment life insurance. In the first case, the client sets himself the goal, for example, to accumulate 5 million by the age of majority of the child. He draws up an endowment insurance contract and gradually or immediately transfers the required amount to the company. At the expiration of the established period, he receives money. If an accident occurs, or the client is diagnosed with a serious illness, the insurance company will pay the same 5 million to him, even if he deposited much less into the account.
Investment life insurance works differently. You give money to the insurance company, and it invests it in stocks, bonds, precious metals. In this case, investments are divided into two parts: those that bring guaranteed and additional income. The first one invests in conservative instruments, which will definitely bring profit, and the second invests in something more risky, where the size of the possible profit is higher, but the risk of not earning anything is also great. If the investment was successful, at the end of the contract you will receive money with interest on both guaranteed and additional income, if unsuccessful, the company will return you only the invested amount with interest on guaranteed income. In the event of the death of the client, the insurance pays the deposit amount with interest. It turns out.
2. Auto insurance
The most popular product in auto insurance is OSAGO, because without it, the law prohibits driving. If the owner of the car takes a car loan, the bank obliges him to additionally issue a CASCO policy. This type of insurance is also popular with newbies who are afraid to scratch or wrinkle their car due to their inexperience. With a CASCO policy, drivers are not so worried about possible damage or theft of the car, because the insurance will cover the repair or purchase of a new vehicle. I think that if it were not for a car loan, CASCO would not have been so popular in Russia because of its high cost.
3. Voluntary health insurance
The popularity of VHI in our country is explained by the fact that in many companies this type of insurance is included in the social package. The entire volume of concluded agreements on voluntary medical insurance is corporate insurance; it is extremely rare to buy individual policies. Those companies that do not include health insurance in the social package offer employees to buy it at a discount, in which case a corporate insurance contract is also concluded.
3 most unpopular types of insurance
1. Financial risk insurance
In general, financial risks are hardly insured in Russia. Theoretically, it would be possible to insure the risk of bankruptcy, but in our country it is difficult to predict it, so the leading companies do not take such risks. One of the types of financial risks – D&O (Directors & Officers Liability), is the liability insurance of managers in case of erroneous management decisions. The policy compensates for the damage caused to the company and covers the costs of legal proceedings. Payments for this risk rose sharply in Russia last year.
2. Civil liability
If you don’t live alone in the forest, you can influence other people in one way or another. For example, there is a risk of flooding neighbors after connecting a new washing machine or due to a faulty water pipe. Even pets can do harm – bite a passer-by or ruin your guests’ clothes. Civil liability can be insured not only by individuals, but also by companies, for example, hotels, car dealerships, concert venues, security companies, fitness centers. If customers suffer as a result of their activities, insurance will cover damages.
3. Personal property insurance
Personal property can also be insured, but in our country this is one of the most unpopular risks. According to statistics from the Ministry of Internal Affairs, half of the crimes committed are theft of other people’s property, while almost every fourth theft was committed by illegal entry into an apartment, house or other premises. It would seem that this should lead to thoughts about insurance, but no, the inhabitants of Russia continue to hope for the best.
There is no insurance culture in our country, and this is a really big problem. We are not used to worrying about the future and thinking “What if …”. But life presents many surprises, and not all of them are pleasant. What if the water supply of the neighbors upstairs breaks? What if a new car gets the attention of a burglar? If you have a serious allergy while traveling? Now is the time for holidays, and those who go abroad buy insurance for a visa. How do they choose policies? Most likely for the price. But if you put a couple of additional checkboxes, you can add the risk of losing luggage, canceling a flight, help in case of alcohol intoxication and other useful options that will help you get compensation in the future. In this case, the price of the policy will change by less than half.