A research consulting firm's report on the rapid development ofthe Russian insurance market finds that its future growth willdepend on various factors such as new regulatory reforms.

New York-based Celent, a member of the Oliver Wyman Group, saidother elements that impact the Russian marketplace include thepopulation's mistrust and unawareness of insurance, the propensityof the market to further consolidate, and the level of foreigninvestments.

Russian insurers will have to implement initiatives in order togain competitive advantage in this changing environment, Celentadvised.

Russian insurance companies are going to spend around $2.3billion on IT in 2011, the report said.

Insurers that can effectively improve their core processes,efficiently value new investments in information technology, andform new strategic partnerships will emerge as the new leaders, thefirm predicted.

“With strong growth expected in the real life and non-lifeinsurance sectors and the rapid development of bancassurance,insurance IT spending in Russia will almost double during the nextfour years,” said Nicholas Michellod, a senior analyst withCelent's insurance group and author of the report, in astatement.

Celent noted data from Swiss Re showing that the Russianinsurance market is dominated by the non-life sector, with $20.9billion in premium in 2006, compared with $571 million for the lifeside.

“Core insurance processes in particular are still notefficiently aligned with companies' goals and not supported byproper resources in terms of information technology,” according toMr. Michellod.

The report advised that Russian insurers tend to believe that ITvendors do not fully understand their specific needs and thereforecannot meet their requirements.

Celent said it encouraged IT vendors as well as IT consultingfirms to better communicate how they can bring added value toinsurance companies.

The firm said Russian players need to adopt new technologiesquickly, and notably in core areas such as claims handling,customer relationship management, and policy administration as wellas distribution and sales.