Russia should consider reintroducing mandatory fire insurance for homes after the state had to spend millions of dollars rebuilding houses destroyed by wildfires. Unlike developed economies, insurance is still a recent market in Russia, risking bankruptcy for farmers and leaving the government to bear the cost of rebuilding homes. Most Russian homes outside major cities are uninsured after mandatory coverage was abolished in 1998.
“Perhaps we will have to come back to the issue of obligatory fire insurance for houses,” President Medvedev said while visiting the southern Russian region of Voronezh, which was badly hit by the wildfires. “It is wrong to make up for the damages from fires at the expense of the state,” he said.
The Russian budget lost at least 12 billion roubles ($392 million) due to the wildfires, Emergencies Minister Sergei Shoigu said last month, though experts estimated the overall damage to the economy could top $14 billion. Russia’s insurance industry comprises more than 700 companies, led by state-controlled Rosgosstrakh which has been earmarked as a possible privatisation target.
Rosgosstrakh says the consumer insurance market is likely to more than double over the next five years. Medvedev told a meeting of officials last week that developing the insurance market was a key precondition for a Kremlin-backed project aimed at turning Moscow into a regional financial centre. The government may encourage the sector by subsidising people willing to insure their property, Kremlin’s top economic aide Arkady Dvorkovich said after the meeting.
