2014 was a difficult and complicated year, full of events that heavily impacted all firms operating in the Russian insurance market. The economic aftershocks continue to echo across the insurance industry, causing market growth to progressively slow. Against this backdrop of unstable foreign exchange rates, CMTPL insurance legislative reforms caused a market redistribution between the large and medium companies. Our survey's participants forecast that smaller market players will, like the Top-11 to Top-20 companies, see decreases in sales. This is due to the unstable macroeconomic environment, the limited resources that smaller players can call upon, and the greater hurdles they face in raising additional capital.

The expected loss ratios for Casco, CMTPL and VMI have increased when compared with last year's estimates. However, cost-cutting activities scheduled by insurers at the beginning of 2014 were effective, having prevented decreases in expected profitability for all lines of business, except Casco. We can thus conclude that the preventive measures taken to maintain the profitability of Casco are likely to have been insufficient.

Changes made by the regulator to compulsory insurance have intensified regulatory pressure on companies in all market segments. Regulation can affect any player, irrespective of size, as recent insurance market events show. Nevertheless, our survey participants continue to believe that areas such as capital adequacy and insurance fraud still require regulatory control.