Eight out of ten insurance firms in Russia will go bust by the end of the economic downturn, a top insurer has told RT.

It comes as the industry watchdog warns of an imminent “crisis of non-payment”.

In the first nine months of 2009, Russia's insurance market contracted 12%. At the same time, the crisis has caused a surge in claims from remaining clients.

Such a mix would be bad enough in developed markets, dominated by a handful of insurers with deep pockets.

Russia has 722 insurance providers, most of them tiny. However, Aleksandr Grigoriev, Chief Executive of Ingosstrakh, says that no one is safe.

“Even the biggest insurers are facing liquidity problems.”

Sector heavyweights say the credit crunch will kill off the majority of Russian insurers, leaving more clients for those who manage to struggle through. Boris Jordan, president of Renaissance Insurance, welcomes the news.

“Russia's insurance market has over 700 insurance companies, of which real functioning ones are less than a hundred. We see the closure of over 600 companies as a positive sign.”

The industry watchdog says doomed insurers are now cheating death by finding excuses not to pay out. Complaints to Strahnadzor from claimants have more than doubled this year to 23,000.