Importance The growth of the composite indicator of losses over the recent two years forced many Russian insurance companies to exit the market or partially cease their sales. Nine companies out of the top 20 had a net loss in 2013. Some of them have already announced reorganization of their insurance portfolio and closure of regional sales offices, and stopped retail sales. Further growth of the loss ratio may not only have an adverse effect on the industry's stability, but also undermine public confidence in the insurance and financial sectors as a whole. Objectives The objective of the article is to analyze the current situation in the insurance market and to offer measures to solve the problem. Methods I have analyzed statistical data of insurance companies' operations and identified the main reasons of the high loss ratio in the insurance market based on econometric tools. Results I conclude that to reduce the loss ratio, the companies should change the processes of selling insurance products and claims settlement. First, the non-price competition should become the main form of competition among Russian insurers. Secondly, it is necessary to impose restrictions on the commission to insurance intermediaries. Thirdly, insurance companies have to work out joint measures to deal with unscrupulous contractors. Conclusions and Relevance Based on the results of the study, I offer measures that can help reduce the loss ratio on many insurance types. However, a positive effect is possible only if all insurance companies (at least the top 20) are involved in this process.
Keywords: loss ratio, private, corporate insurance, underwriting, claims settlement
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