Insurance for shopping centers against fires has risen in price in Russia by 5-20%.

In Russia, the price of fire insurance for shopping centers has increased by 5-20%, following a series of large fires last year. The segment has already lost 15-20 billion rubles and has used up all the premiums collected by the market over the past 15 years, major insurers stated.

This was reported to Izvestia by several sources in the real estate market.

Fire insurance for shopping centers rose in price by 5-20% in 2023, according to Pavel Lyulin, vice president of the Union of Shopping Centers. He explained that 2022 was an extremely bad year for the industry, as shopping centers experienced more than 10 fires. Insured owners of shopping centers sought compensation from insurers, who in turn turned to the National Reinsurance Company (RNPC), which covered part of the losses when the limit was exceeded.

According to the expert, this year, RNPC revised its fire-related policies, tightening its requirements for insurers. As a result, insurers have made changes in their dealings with shopping centers. Therefore, owners of shopping centers who are entering into contracts with insurance companies this year are facing higher insurance prices, depending on the condition and fire protection of the property.

"Insurers' requirements have increased regarding the investigation of fire circumstances. For example, if violations were previously identified in a shopping center, it will be difficult for the owner to receive compensation," Pavel Lyulin emphasized. "While the industry discusses the situation, owners have planned meetings with insurance company representatives and the Ministry of Emergency Situations (EMERCOM)."

Representatives of shopping centers, who are part of the Russian Council of Shopping Centers, told Izvestia that the majority of contracts with insurance companies were signed in the second and third quarters of last year and are still active. Rates usually don't increase when a contract is renewed, provided there were no claims in the previous period.

Indeed, insurers are now trying to study risks more thoroughly and in detail. Therefore, for shopping centers with any issues regarding risk quality or incidents over the past year, there may be price increases from insurers, said Absolut Insurance to Izvestia, but this is not a widespread process.

Alexey Galakhov, Deputy CEO for Corporate Business at Ingosstrakh, told Izvestia: "We have all seen the recent major fires in shopping centers with severe consequences. The causes of the fires are similar: unauthorized repair and welding work, various violations of fire safety rules. We will adjust our risk assessment methods and policy conditions. This segment has already gone into the red by 15-20 billion rubles and has exhausted all premiums collected by the market over the past 15 years, so the rates will be adjusted to reflect the real level of risk."

Rosgosstrakh added that the tariff for each shopping center accepted for insurance by Rosgosstrakh is calculated individually, taking into account the client's needs for property insurance protection and numerous factors characterizing the object.

After a series of large losses, rates naturally increase, which is normal. On average, the increase may be 10-20%, said AlfaStrakhovanie. However, the large losses this year did not affect all retail segments. For example, it would be illogical to raise rates for a modern shopping center in the city center due to a fire in an Ozon warehouse, they added.

Source: ASN