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December 16th ‘Ingosstrakh’ insurance company reported its results for eleven months trading in 2005. In spite of the positive dynamics (travel insurance bonus was approximately 373 million rubles, which is 69 million rubles (22%) more than the corresponding figures from last year) some problems of the Russian travel insurance market were pointed out. The core problem is the reduction of tariffs as a result of tough competition among insurance companies. ‘As for the number of tourists traveling abroad we see a very good tendency, for example, the number of tourists going to Turkey has increased 1.5 times. Meanwhile our insurance bonuses do not increase that dramatically’, said Anatoli Kemaev, the head of the Development Department of the Management of Travel Insurance of ‘Ingosstrakh’. A similar tendency has been pointed out by other specialists with the only note of caution that travel insurance market is not extending at the moment: there is simply the exchange of market share between the players.
At present in order to attract new clients, some insurance companies offer tariffs from 0.15 Euro per day for insurance coverage of 15 000 Euro and from 0.25 Euro for 30 000 Euro coverage. For comparison: an average insurance bonus in the countries of Western Europe is $2–3 per day. ‘I know some portfolios which are loss-making for insurance companies’, said Natalia Kucherova, director of the Department of Travel Insurance of ‘NASTA’- ‘Thus, they have to decrease the quality of service for insured clients. For example, they do not work with their assistant-companies and tell their clients to settle the situation from their pockets compensating the expenses on returning’.
The insurance bonus within a tour package is too small to dramatically influence its cost and the level of sales. Reliability is more important than price. ‘There was a case when insurance services and advertising support were offered to us and the cost was incredibly low. But we were not really interested’, said Marat Djapuev, the head of the Marketing Department of ‘Detour’, - the situation on the travel insurance market is similar to the one with mass tourism, when low prices are used to attract clients in prejudice of quality of service’. Therefore, it appears that the problems’ core is not so much the tendency to cut prices, as selling at dumping prices by some insurance companies. ‘The problem is that we can not agree on some exact limit’, confirmed Anatoli Kemaev.
However some positive tendencies are to be noted. For example, ‘Ingosstralkh’ outlines the increasing interest in some additional types of insurance, especially to non-departure insurance and loss of luggage insurance.
