Improvement of the insurance market in Russia

In recent years the Russian insurance market had many problems. Due to the insufficient transparency of the market, low standards of some organizations activity, increased number of fraud and complaints to work of the companies cases (especially regarding the CMTPL) mistrust of insurers to the market players increased.

For the solution of the problems designated above the state has made the decision on the insurance market improvement consisting in toughening of supervision over organizations activity. The policy of the regulator of the branch – the Central Bank of Russia – is directed to market sanitation as a result of which the branch will have only really operating enterprises with necessary financial stability for long-term presence on the market. For implementation of this purpose amendments to the existing legislation, and also new regulations and documents have been adopted.

Among the main changes it is possible to mark the introduction of special depositaries, curators appointment, toughening of requirements to the financial solvency and assets quality, transition to the new reporting standards, and also the binding character of the accession to self-regulatory organization (SRO) of insurers (the All-Russian union of insurers intends to turn into it by the middle of 2016) since July, 2015).

Thus, the insurers of life and the company are engaged in obligatory insurance types are now obliged to place assets through special depositaries. This institute is an additional control instrument as in case of violations identification the depositaries are obliged to report on them to the Central Bank for acceptance of the appropriate measures.

In June, 2015 there has begun the work of the institute coaching: for the companies from the TOP 100 curators, the qualified personnel with experience in insurance branch, which has to estimate position of insurers have been appointed and in due time reveal risks and problems for purpose of the individual format of control and supervising actions in their relation. The duty of curators includes information collection about the owners and affiliates, corporate structure, and also reporting, actuarial and audit reports, forecasts for development. After this mechanism introduction the analysis by the Bank of Russia has became systematical, but not fragmentary.

as of the beginning of 2015 out of 404 companies were presented at the market at the end of the year. At the same time in 2016 the Central Bank of the Russian Federation has continued the policy on supervision toughening. So, according to the plan by the end of the year curators will be appointed in all companies, the library of insurers business plans will be created, profiles of the separate companies will be made. Also this year insurers have to pass to the new book of accounts, transfer the reporting to the XBRL format and pass completely to the electronic document flow.

In addition to the bill on the authorized capitals increase of the insurers is introduced to the State Duma. For example, the companies carrying out only medical insurance will have to increase the AC from 60 to 120 million rubles. Other insurers will have to raise the AC from 120 to 300 million rubles, and reinsurers – from 480 to 600 million rubles. As experts mark, the minimum authorized capital increase will lead to large federal companies strengthening and, unfortunately, will not promote emergence the niche players rendering services to certain client segments on the market which due to various reasons cannot serve large companies.

Despite the measures rigidity, the main participants of the market in general support the consistent state policy on the market improvement. In the last year in generally the market was abandoned by small insurance businesses the exit of which remained almost unnoticed for the clients. It is expected that as a result of the applied measures by the end of 2016 there will be already about 200 companies on the Russian market . At the same time insurers who will manage "to survive" will work already at absolutely other qualitative level, have other business architecture as close as possible to the European companies. As a result of business processes optimization and insolvent players leaving the transparency of the market will increase that finally will lead to the trust of clients increase to insurers.

Table 1. The list of the insurers conforming to requirements of article 15.2 of the Federal law dated 30.12.2004 No. 214-FZ "About participation in shared-equity construction of apartment houses and other real estate objects and about amendments introduction to some acts of the Russian Federation" dated 24.06.2016

№	Name of the insurer	License to carry out insurance	Individual Taxpayer Number
1.	«Regionalnaya Strakhovaya Kompaniya» LLC	SI № 0072	1832008660
2.	«VSK» Insurance JSK	SI № 0621	7710026574
3.	«Insurance Company «PARI» JSC	SI № 0915	7704041020
4.	«Ingosstrakh» Insurance Public JSC	SI № 0928	7705042179
5.	«Insurance group «UralSib» JSC	SI № 0983	7703032986
6.	«Moskovskaya aktsionernaya strakhovaya kompaniya» CJSC	SI № 1427	7709031643
7.	«Public JSC «ENERGOGARANT» Public JSC	SI № 1834	7705041231
8.	«AlfaStrakhovanie» PJSC	SI № 2239	7713056834
9.	«Absolut Strakhovanie» JSC	SI № 2496	7728178835
10.	«Insurance Company «RSJHB- Strakhovanie » JSC	SI № 2947	3328409738
11.	Insurance Society «VERNA»	SI № 3245	7723011286
12.	Insurance company «VTB Strakhovanie» LLC	SI № 3398	7702263726
13.	«BIN Strakhovanie» LLC	SI № 3487	7717115093
14.	«Insurance Company «RESPECT» LLC	SI № 3492	7743014574
15.	«Potrebitelskoe obschestvo vzaimnogo strakhovaniya grazhdanskoy otvetstvennosti zastroyschikov» NPO	VS № 4314	7722401371

Source: Central Bank of RF

Table 2. Insurance premiums and payments under insurance contracts, the insured sum under the signed and existing insurance contracts, and the number of the signed and existing insurance contracts declared and settled insured events in the first half of 2016.

Name	Insurance premiums (contributions) for insurance contracts, thousand rubles	Number of insurance contracts, pieces	The insured amount under insurance contracts, thousand rubles	Payments under insurance contracts, thousand rubles	Выплаты по договорам страхования, тыс. руб.
Voluntary and obligatory insurance (except obligatory medical insurance) – total	589 710 035	71 719 179	26 890 167 218 115	10 310 238	244 823 399
I. Voluntary insurance
Life insurance	88 845 767	2 162 000	1 032 170 080	319 488	13 097 555
Pension insurance	675 538	2 273	1 284 939	253 136	579 833
Insurance different from life insurance	371 508 945	50 810 295	204 012 927 078	8 603 399	147 648 929
Personal insurance (except life insurance)	142 164 477	28 259 412	77 545 161 486	7 740 415	55 397 840
Property insurance	229 344 468	22 550 883	126 467 765 592	862 984	92 251 089
II. Obligatory insurance
Obligatory personal insurance	10 461 700	9	6 637 579 861	27 346	6 123 507
Obligatory property insurance	118 893 623	18 746 875	26 678 484 541 096	1 360 005	77 953 408

Source: Central Bank of RF

Useful materials:

• The act of the Russian Federation dated 27.11.1992 N 4015-1 (edition dated 03.07.2016) "About insurance organization in the Russian Federation" (Article 32. Licensing of insurance business)

• Chapter 48. Insurance of the Civil Code of the Russian Federation (part second) dated 26.01.1996 N 14-FZ (edition dated 23.05.2016)

• Instructions of the Bank of Russia "About insurers activity monitoring procedure by the Bank of Russia" dated 18.01.2016

• "About requirements to the statement, data, documents submitted for insurance business license obtaining and also on their standard forms establishment" dated 10.07.2014

• Instructions of the Bank of Russia "About forms, terms and procedure of drawing up and submission of the reporting by insurance companies and societies of mutual insurance to the Central Bank of the Russian Federation" dated 30.11.2015

• About amendments to the Instructions of the Bank of Russia dated November 16, 2014 No. 3445-U "About procedure of own funds (capital) investment of the insurer and the list of the assets allowed for investment" from 09.03.2016

• About amendments to the Instructions of the Bank of Russia dated November 16, 2014 No. 3444-U "About the procedure of investment of insurance reserves fund and the list of the assets allowed for investment" from 09.03.2016