Corresponding authors: Svetlana V. Shchelokova (
Academic editor:
The article analyzes the level of competition of insurance product offerings in the following four markets using the Russian market as an example: (1) life insurance, (2) accident and disease insurance, (3) voluntary health insurance and (4) pension insurance. The purpose of the study is to assess competitive dynamics in the insurance product markets during the period under review. Relevant data of the Expert Rating Agency for 2018-2021 were used as the study basis. The study methodology is based on the assessment of the competitive situation using the SV matrix, which is based on
Shchelokova SV, Vertogradov VA (2023) Individual insurance products: is there a real choice for Russians? Population and Economics 7(1):1-20.
Competitive analysis of the market of individual insurance products is substantiated by economic changes in all countries associated with the pandemic, which could not but affect the insurance market. Formally, there is a fairly broad market of individual insurance products in each country, but a real consumer choice may be limited by the dominance of large insurance companies in certain types of insurance products.
Using the Russian market as an example, the article attempts to evaluate competition of insurance products, as well as changes in competition during the period under study in the following four markets: (1) life insurance, (2) accident and disease insurance, (3) voluntary health insurance and (4) pension insurance.
The issue of competition between individual insurance products has already been studied in various aspects.
Researchers are interested in peculiarities of the national insurance markets. For example, the article (
Also interesting is a study (
Much attention has been recently paid to the impact of the COVID-19 pandemic on insurance markets. For example, paper (
In Russia, according to the report of the National Rating Agency (March 2022), the concentration of the Russian insurance market in 2022 increased compared to 2021. The share of the TOP-100 companies included in the ranking accounts for 99.89% of all premiums, the share of the TOP-50 adds up to 97.06%. In 2020, these shares equaled to 99.68% and 96.45%, respectively. This concentration growth is due to the TOP-20: their share increased from 84.86% to 86.46% (National rating… 2022). According to the authors of the report, in 2022, the market concentration will continue to increase, and the share of the TOP-50 insurers will be in the range of 97.5%-98%. Also, in 2021, the trend towards reducing concentration of the reinsurance market continued: the TOP-10 reinsurers collected 86% of all premiums on incoming reinsurance (in 2020 – 87%, in 2019 – 88.5%). The share of the TOP-3 leaders (Russian National Reinsurance Company (
Paper (
Paper (
Unfortunately, current research on competition in the Russian insurance market is quite limited in terms of the tools used (mainly, it is
From the consumer point of view, the market of accumulative life insurance products is an alternative to bank deposits. Therefore, in order not to miss potential sales opportunities, all leading banks are actively offering accumulative life insurance as part of their services. In 2019, the share of policies sold by banks accounted for 85% of the total volume (
An essential part of the life insurance market is life insurance of the borrow or credit life insurance. As a result, there is a direct relationship between the volume of the life insurance market and the volume of loans issued, which depends on the key rate determined by the Central Bank of Russia (
Paper (
The accident and disease insurance market is also directly affected by the population demand for loans (
In fact, the main competitor of VHI in Russia is compulsory health insurance (
As a result, in Russia, the main buyers of VHI are legal entities that purchase policies for their employees – 87.7% of the market volume by the end of 2020 (
According to Fatkhlislamova G.F. (
In general, most researchers use standard indices to analyze competition in the insurance market (most often
What number of offerings (or insurance companies in the market) can imply availability of consumer choice?
As written in (
However, let us not ignore the fact that the consumer behavior is not always rational. For example, paper (
It is also important that one and the same need can be met by insurance products of different types. For example, coverage for tick bites (insurance policy), which is popular in many Russian regions, can be provided both as part of VHI policies and as accident and disease insurance (
life insurance,
accident and disease insurance,
voluntary health insurance (it makes no sense to consider compulsory health insurance, since there is a set of medical services that does not depend on the choice of the insurance company),
voluntary pension insurance.
To analyze consumer choice, we will analyze competition in each of the markets and consider relevant changes in 2018-2021. If a certain segment of the insurance market has a low concentration of business and low level of differentiation between players, then we will assume that the market is close to perfect competition and the consumer does have a choice. If there are groups of dominant companies in the market or a high concentration of business, we will consider in more detail the nature and specific features of this competition.
Accordingly, our approach will consist of the following steps:
1. First, we calculate the presence and level of dominance for each of the markets using the SV (strength/variety) matrix.
2. Then we calculate HHI to analyze those markets where dominance was not automatically detected (
a. If there is no dominance and HHI is less than 1000, we consider the market competitive, and that the consumer has got a choice.
b. In other cases, a meaningful conclusion requires additional information about the competitive situation in the market for expert evaluation.
3. For all markets, we look at the possible institutional advantages of the leaders in order to further assess the level of competition (
The use of the SV matrix (
The Lind index used in the matrix is designed to determine the presence of a dominant group (i.e. two or more companies) and its size in the analyzed market. In case when there is only one dominant company in the market, the Lind index does not show it. Therefore, we will identify such cases using the Herfindahl-Hirschman Index (
More information about coefficient calculation can be found in (
Description of the SV matrix quadrants.
Based on the logic of constructing the SV matrix, if the market is in the B4 quadrant, then the companies of the dominant group seek to protect the existing oligopolistic equilibrium by preserving the existing ones and creating additional barriers to entry of any new companies. In this situation, we can say that the consumer choice will be limited by various institutional and market advantages of the dominant companies. This may manifest itself in the fact that, for example, to provide a particular service, an organization may require an insurance policy issued by a limited number of insurance companies.
In the RO quadrant, the consumer choice will be much wider, since companies within the dominant group actively compete not only with other companies, but also with each other, and therefore it is quite difficult for them to unite, which has a beneficial effect on the consumer choice options.
The consumer has a somewhat narrower choice in the I and G segments, but in order to assess the availability of a real choice, it is necessary to analyze in detail the number of players in the dominant group, as well as the market share of the leader. If the leader’s share is over 50% (
Additionally, in many cases it will be necessary to analyze possible institutional advantages of the market leaders, since if, for example, the bulk of buyers of one of the products is state-owned companies, then it is possible that insurance companies with state participation may have advantages over the rest of the market participants.
Based on
Main indicators of the individual insurance market – amount of the collected insurance premiums in 2021
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1. Total amount of insurance premiums (including incoming reinsurance) | 1 881 178 |
1.1 Total amount of premiums by type of voluntary insurance (including incoming reinsurance) | 1 626 708 |
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1.1.1.2 Pension insurance premiums | 2 170 |
1.1.2 Non-life insurance premiums | 1 102 306 |
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In general, the Russian voluntary insurance market consists of the following two large segments “Life insurance” and “Non-life Insurance”. In line with the purpose of the study, we will focus on the market segments related to the life and health of the population, namely, we will consider “Life insurance premiums”, “Personal insurance premiums”, excluding “Property insurance premiums”.
The table below presents the authors’ calculations of
Therefore, the size of the dominant group (as will be specified below) was evaluated by experts, and then
Table
We can observe a similar situation in the accident and disease insurance segment in 2018 (see Table
In 2021, the situation related to this type of insurance resembles the one in 2018:
Next, we will separately consider the following two segments: life insurance (1.1.1) and personal insurance (1.1.1.2)
It is important to note that since pension insurance premiums account for a very small part of the “Life Insurance” segment (about 0.4%, according to Table
Calculation data, 2018-2021
Insurance markets | Year | Lind=> |
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Quadrant |
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Market Volume (million rubles) |
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1. Total amount of insurance premiums (including incoming reinsurance) | 2021 | NO | NO | NO | NO | 722 | 1 881 178 |
2020 | 9 | 68% | 0.036 | B4 | 691 | 1 601 186 | |
2019 | 10 | 68% | 0.032 | B4 | 572 | 1 483 033 | |
2018 | 9 | 63% | 0.035 | RO | 551 | 1 479 527 | |
1.1 Total amount of premiums by type of voluntary insurance (including incoming reinsurance) | 2021 | 10 | 71% | 0.046 | B4 | 753 | 1 626 708 |
2020 | 10 | 70% | 0.040 | B4 | 727 | 1 352 779 | |
2019 | 2 | 26% | 0.031 | RO | 600 | 1 245 336 | |
2018 | 3 | 35% | 0.057 | B4 | 597 | 1 227 498 | |
1.1.1 Life insurance premiums | 2021 | 4 | 73% | 0.09 | B4 | 1 615 | 524 402 |
2020 | 4 | 72% | 0.060 | B4 | 1 465 | 430 517 | |
2019 | 4 | 69% | 0.153 | G | 1 743 | 409 374 | |
2018 | 9 | 86% | 0.112 | G | 1 896 | 452 400 | |
1.1.1.1 Life insurance premiums (excluding pension insurance) | 2021 | 4 | 74% | 0.09 | B4 | 1 627 | 522 232 |
2020 | 4 | 72% | 0.060 | B4 | 1 479 | 428 249 | |
2019 | 4 | 69% | 0.153 | G | 1 759 | 407 257 | |
2018 | 9 | 86% | 0.112 | G | 1 912 | 450 840 | |
1.1.1.1.2 Life insurance premiums of the borrower | 2021 | 2 | 68% | 0.014 | B4 | 2 683 | 136 084 |
2020 | 2 | 74% | 0.024 | B4 | 2 958 | 94 548 | |
2019 | 2 | 73% | 0.072 | B4 | 2 870 | 91 491 | |
2018 | 3 | 87% | 0.287 | G | 3 769 | 59 197 | |
1.1.1.2 Pension insurance premiums | 2021 | 5 | 95% | 0.092 | B4 | 2 264 | 2 170 |
2020 | 3 | 77% | 0.029 | B4 | 2 158 | 2 268 | |
2019 | 3 | 80% | 0.029 | B4 | 2 287 | 2 114 | |
2018 | 2 | 65% | 0.006 | RO | 2 458 | 1 560 | |
1.1.2 Non-life insurance premiums | 2021 | 6 | 70% | 0.092 | B4 | 1 264 | 1 102 306 |
2020 | 6 | 69% | 0.086 | B4 | 1 237 | 922 262 | |
2019 | 7 | 70% | 0.043 | B4 | 883 | 835 962 | |
2018 | 7 | 68% | 0.049 | B4 | 817 | 775 098 | |
1.1.2.1 Personal insurance premiums | 2021 | 9 | 81% | 0.14 | G | 2 178 | 462 883 |
2020 | 1* | 42% | 1 | I | 2 005 | 380 639 | |
2019 | 2 | 42% | 0.056 | RO | 1 109 | 368 021 | |
2018 | 7 | 68% | 0.049 | B4 | 817 | 321 378 | |
1.1.2.1.1 Accident and disease insurance premiums | 2021 | 1* | 51% | 1 | I | 2 779 | 262 568 |
2020 | 10 | 83% | 0.143 | G | 2 429 | 203 116 | |
2019 | 9 | 77% | 0.111 | G | 1 458 | 187 366 | |
2018 | 1* | 53% | 1 | I | 2 287 | 169 556 | |
1.1.2.1.2 Health insurance premiums | 2021 | 8 | 83% | 0.099 | B4 | 1 650 | 200 317 |
2020 | 8 | 84% | 0.099 | B4 | 1 700 | 177 526 | |
2019 | 9 | 85% | 0.085 | B4 | 1 506 | 180 655 | |
2018 | 9 | 85% | 0.086 | B4 | 1 657 | 151 843 |
* in these segments, the Lind index does not automatically show the dominance (which is related to the specifics of the index calculation, for more details, see (
• Personal insurance premiums in 2020;
• Accident and disease insurance premiums in 2018 and 2021.
Personal Insurance Premiums, 2020.
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Moscow | 160 734 | 42.23% | 51 823 | 32.20% |
2 | RESO-Guarantia | Moscow | 27 398 | 7.20% | 15 801 | 57.70% |
3 | Rosgosstrakh | Lyubertsy | 26 122 | 6.86% | 6 404 | 24.50% |
4 | AlfaStrakhovanie | Moscow | 25 397 | 6.67% | 13 480 | 53.10% |
5 | VSK | Moscow | 19 758 | 5.19% | 5 859 | 29.70% |
Accident and Disease Insurance Premiums, 2018
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1 | VTB Insurance | Moscow | 78 821.59 | 46.5% | 2646.4 | 3.4% |
2 | VSK | Moscow | 9 466.77 | 5.6% | 1221.06 | 12.9% |
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Moscow | 7 512.17 | 4.4% | 2967.16 | 39.5% |
4 | CARDIFF | Moscow | 6 246.66 | 3.7% | 488.09 | 7.8% |
5 | AlfaStrakhovanie | Moscow | 6 217.34 | 3.7% | 1051.09 | 16.9% |
Life insurance premiums (excluding pension insurance) (1.1.1.1)
Life insurance premiums of the borrower (1.1.1.1.2)
Pension insurance premiums (1.1.1.2).
In 2021, a third of the increase in premiums in the insurance market is due to the life insurance segment (94 out of 290 billion rubles). According to the National Rating Agency, in 2021, “the main factors of the premium growth were the record volume of mortgage and consumer loans, as well as low deposit rates combined with the introduction of taxation of interest income on deposits” (National rating… 2022)
The figure below outlines the SV matrix showing these three segments of the insurance market.
Let’s consider each of the segments separately.
As the SV matrix shows (see Figure
SV matrix for life insurance premiums in Russia, 2018-2021.
Rosgosstrakh Life, which is 5th in the ranking in 2020 and 2021, lagged more than twice behind Renaissance Life, which ranks fourth.
According to the National Rating Agency, “After information disclosure standards were introduced, banks – the main sellers of life insurance contracts – shifted their interests towards other products, both insurance (for example, accumulative life insurance) and non-insurance. The problem of misselling has become less acute, yet impossible to be fully eradicated, creating reputational risks in this segment. The segment development is also negatively affected by low level of accumulation in the population income, competition due to other investment products, including conditions for tax deductions, as well as lack of simplified identification of customers» (National rating… 2020).
From 2018 to 2021, this market segment moved from the G quadrant to B4 (see Figure
In this case, we can assume that a real consumer choice is missing, since 2 companies control three quarters of the market.
In Russia, as of 2019, there were 46.5 million pensioners, including 36.7 million receiving an old-age pension (
Accident and disease insurance premiums, 2021
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Moscow | 134 027 | 51.05% | 5 721 | 4.3% |
2 | Rosgosstrakh | Lyubertsy | 22 005 | 8.38% | 1 218 | 5.5% |
3 | Tinkoff Insurance | Moscow | 15 764 | 6.00% | 343 | 2.2% |
4 | AlfaStrakhovanie | Moscow | 11 119 | 4.24% | 2 915 | 26.2% |
5 | VSK | Moscow | 10 585 | 4.03% | 1 626 | 15.4% |
In terms of competition in this market in 2018-2021, this market segment has moved from the RO quadrant to B4, which means a significant increase in the share of dominant players (from 65% in 2018 to 95% in 2021). The following 5 companies (Sovcombank Life, PPF Life Insurance, Geopolis, Ingosstrakh-Life Insurance Company, Capital Life Life Insurance) formed the dominant group in 2021 (see Table
Dominant group composition and market share of the companies in the pension insurance market, 2018-21
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Sovcombank Life (MetLife until 2021), ( |
33.51% |
29.15% |
27.20% | 32.80% |
PPF Life Insurance | 25.74% |
22.92% | 23.00% | 32.00% |
Geopolis | 16.31% |
24.72% |
29.50% |
11.10% |
Ingosstrakh-Life | 10.89% |
10.48% | 10.50% | 14.00% |
Capital Life Life Insurance | 8.95% |
6.25% | 2.40% | 1.80% |
Renaissance Life | 3.60% |
4.51% | 5.50% | 5.80% |
0.84% |
1.52% | 1.20% | 1.50% |
Formally, the size of the dominant group has been constantly increasing since 2018, indicating expansion of the consumer choice, but in reality, in the end of 2021, an oligopoly of 5 companies controlled 95% of the market. This may lead to negative consequences, however, most likely this will not happen, since pension insurance is considered by consumers on a par with non-state pension funds, whose offers expand their range of choice (
Conspicuous is a low share of
The personal insurance market showed significant changes under the study period, having successively passed all 4 segments in 4 years, although all segments of this market, as shown in Figure
SV matrix for the personal insurance market in Russia, 2018-2021.
This is due to the fact that the first largest company in 2018 (VTB Insurance with a market share of 17.3%) was sold to
Emergence of a strong leader in this market has moved the market from a poorly differentiated oligopoly in 2018 to a highly differentiated one in 2021. The dominant group of 9 companies has been formed by 2021, since companies with the ranking number 10 and under (Soglasie) began to lose their shares (see Table
Personal Insurance Market Shares, 2018-2021
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44.33% | 42.23% | 23.40% | 14.90% |
2 | Rosgosstrakh | 7.11% | 6.86% | 6.60% | 5.30% |
3 | RESO-Guarantia | 7.07% | 7.20% | 6.80% | 8.00% |
4 | AlfaStrakhovanie | 6.78% | 6.67% | 5.80% | 8.50% |
5 | VSK | 4.39% | 5.19% | 5.30% | 7.30% |
6 | Ingosstrakh | 3.75% | 3.61% | 3.80% | 6.60% |
7 | Tinkoff Insurance | 3.41% | 3.17% | 2.70% | 1.20% |
8 | Alliance Life | 2.28% | 2.51% | 2.20% | 3.00% |
9 | Renaissance Insurance | 2.24% | 2.24% | 2.30% | 3.00% |
10 | Soglasie | 1.18% |
1.30% | 1.50% | 1.20% |
11 | CARDIFF | 1.16% |
2.22% | 2.90% | 2.00% |
12 | RSHB Insurance | 0.92% |
1.02% | 0.90% | 0.70% |
13 | Sovcombank Insurance | 0.90% |
1.30% | no | no |
14 | VTB Insurance | 0.90% | 2.05% | 18.90% | 17.30% |
15 | Sberbank Insurance | 0.88% | 0.50% | 0.30% | 1.10% |
Lind (core of the market) | 9 | 1 | 2 | 7 | |
Quadrant | G | I | RO | B4 |
If the companies of the dominant group stick together, then a gradual decrease in differentiation between companies and evolution of the market into the B4 segment can be expected.
In any case, there is a formal availability of a fairly broad choice for consumers, however, the leader with a market share of almost 45% also makes it possible to hypothesize that
This market is so peculiar that the use of the SV matrix apparatus required manual adjustment in two periods (see Table
Market share of accident insurance companies, 2018-2021
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51.05% | 47.45% | 13.80% | 4.40% |
2 | Rosgosstrakh | 8.38% | 6.86% | 2.50% | 1.80% |
3 | Tinkoff Insurance | 6.00% | 5.94% | 5.30% | 2.50% |
4 | AlfaStrakhovanie | 4.24% | 5.22% | 3.20% | 3.70% |
5 | VSK | 4.03% | 4.15% | 6.50% | 5.60% |
6 | RESO-Guarantia | 3.33% | 3.55% | 4.00% | 2.50% |
7 | Ingosstrakh | 2.09% | 2.03% | 1.70% | 1.20% |
8 | CARDIFF | 2.04% | 4.15% | 5.70% | 3.70% |
9 | RSHB Insurance | 1.47% | 1.73% | 1.60% | 1.50% |
10 | Uralsib Insurance | 1.19% | 0.90% | 1.10% | 1.20% |
11 | Capital Life Life Insurance | 1.03% | 1.18% | 1.50% | 2.00% |
12 | Ugoria | 1.01% | 0.96% | n/a | 0.50% |
13 | Sberbank Insurance | 1.01% | 0.54% | 3.00% | 0.00% |
14 | Renaissance Insurance | 0.88% | 0.99% | 0.80% | 0.60% |
15 | VTB Insurance | 0.79% | 2.48% | 33.20% | 46.50% |
Lind (core of the market) | no | 10 | 9 | no | |
Quadrant | I | G | G | I |
A detailed analysis shows that, for example, if we compare 2020 and 2021 by market share, there are no significant changes registered apart from the continued business transfer from VTB Insurance to
On the other hand, the choice of various products in the market is more than available. And dozens of large insurance companies claim the second half of the market.
It was the most stable market in the period under study. The market share of the dominant group ranged from 83% to 85%, the market was consistently in the B4 quadrant – a natural oligopoly. Although about a third of the market has always been occupied by
Composition of the dominant group in the health insurance market and the market share of its member companies, 2018-2021
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35.53% | 36.25% | 33.30% | 36.4% |
RESO-Guarantia | 11.98% |
11.38% |
9.70% |
9.4% |
AlfaStrakhovanie | 10.11% | 10.06% | 8.5% | 9.2% |
Ingosstrakh | 5.92% |
5.42% | 6.00% | 6.2% |
Rosgosstrakh | 5.45% |
6.87% |
10.90% |
4.3% |
Alliance Life | 5.17% | 5.29% | 4.4% | 5.1% |
VSK | 4.86% | 5.16% | 4.0% | 4.3% |
Renaissance Insurance | 4.01% | 3.68% | 3.8% | 4.2% |
Soglasie | 1.82% | 1.99% | 2.0% | 1.7% |
VTB Insurance | 4.1% | 5.6% |
It is interesting that throughout all four years, the leader of the second echelon, which followed the dominant group in the rankings, was Soglasie company. Also, intriguing is a constant growth of the market share of RESO-Garantia and a sharp decline of Rosgosstrakh over the period under study.
Comparing 2019 and 2021, Table
The insurance market of the Russian Federation in 2018- 2021 is quite diverse in terms of dominance. Most of individual insurance products belong to the B4 quadrant, which is characteristic of a natural oligopoly, however, the situation with the dominant group related to types of insurance under study is significantly different, since the number of dominant players varies from 2 to 10, significantly affecting the real choice of the consumer.
Conclusions:
It is worth paying special attention to the fact that among the considered markets there is neither with low concentration nor without a dominant group or a dominant leader, which greatly distinguishes the Russian market from the ones in other countries.
Differentiation within the dominant groups by most types of insurance under study decreased in 2018-2021, which may indicate equalization of institutional advantages of the market players during the pandemic.
In the voluntary health insurance market, the choice is quite large, and a presence of a large dominant group of eight companies suggests formation of the two-tier companies. The upper echelon sets quality standards and dominates by price, while other companies can compete with the leaders due to niche offerings and price factors.
The pension insurance market is an example of a significant reduction in the consumer choice: in 2018 it was characterized by a relatively “weak” dominant group, while a poorly differentiated oligopoly of 5 companies controlling 95% of the market has been formed by 2021.
Emerging players with market and institutional capabilities similar to the SOGAZ level introduce significant changes into the market structure, as in the case of the personal insurance market, for example, whereas SOGAZ has absorbed the largest player and transferred the market from an oligopoly of seven companies to the actual dominance of the one.
Svetlana Viktorovna Shchelokova – Ph. D. (Econ.), Associate Professor at the Lomonosov Moscow State University, Faculty of Economics, Moscow, 119991, Russia. Email:
Vladimir A. Vertogradov – Head of the laboratory «Project MAX», Faculty of Economics, Lomonosov Moscow State University, Moscow, 119991, Russia. Email: v@svmatrix.online
The mandatory requirement for foreign citizens to purchase a voluntary medical insurance policy was introduced at the beginning of 2015 as part of the entry into force of the Federal Law No. 409-FL “On Amendments to the Labour Code of the Russian Federation and Article 13 of the Federal Law “On Legal Status of Foreign Citizens in the Russian Federation” related to the specifics of the labour regulation of employees who are foreign citizens or stateless persons”. At the initial stage of the formation of this market segment, there used to be many problems: fake policies, policies without adequate insurance coverage, etc. Following the additional instruction of the Central Bank of the Russian Federation No. 3793-U as of May 30, 2016, which defined the requirements for insurance products of this type, the situation has gradually returned to normal, although migrants still do not apply for services under their policies [Grigorieva 2018].
In 2018, it was presented in the ranking as VTB.