Russia’s general insurance industry will decline 14% this year due to the Russia-Ukraine war and economic sanctions impacting most banking assets, according to GlobalData forecasts.

Analyst Deblina Mitra says the short-term growth outlook for the general insurance industry in Russia looks “bleak,” with motor, property, trade credit, and marine, aviation, and transit (MAT) insurance expected to be among the most impacted.

International companies operating in Russia across automotive to oil and gas and aviation are exiting the country, including Shell, BP, BMW and Volkswagen.

These sanctions will have direct ramifications for the insurance industry as many insurers in Russia are part of the large banking groups affected, she says.

GlobalData has lowered its 2022 forecast for general insurance premiums in Russia to 1.08 trillion Rouble ($20 billion), compared with 1.2 trillion Rouble last year, and expects another decline in 2023.

“We expect forecasts up to at least 2026 will be impacted,” GlobalData says.

Top Russian insurers such as Rosgosstrakh and Sberbank are part of banking groups and many also have a significant presence in other European markets, and GlobalData says the sanctions may result in the liquidation of overseas operations – potentially exposing insurers to long-term solvency challenges.

Increased risk volatility is expected to drive demand for political risks, war-risks and cyber insurance products, it says.