– The National Bank is trying to introduce a system of risk-based supervision. Will this affect the innovation of insurance companies?
– Certainly. According to the documents we received from the regulator with the introduction of risk-based supervision, the National Bank will be entitled to use a reasoned judgment in relation to banks, insurance and reinsurance organizations, and brokers.
I want to clarify that in our country the legislation is based on the Romano-German legal system. It is based on standards and rules. There is also a case law in the world - this is the Anglo-Saxon system. The novelty of the regulator is relevant to the latter one, that is, an alien legal element is implanted: there are many risks, the problem is not only the implant, but the question is whether it will survive?
Market participants cannot understand: what is the bench mark in this system, how will this system work.
Moreover, risk-based supervision will complement the supervision of compliance with the quantitative and qualitative requirements established by the regulator to insurance organizations.
It should be noted that there are significant positive innovations in risk-based supervision. Thus, it is proposed to take into account and differentiate violations by the financial organization of the requirements of the legislation depending on the type and severity of the violation, and also provide an opportunity for self-identification and correction of the violations committed - this is a serious positive moment.
– Financiers almost always formally comply with all the requirements of the regulator. But there are very large organizations on the insurance market, which practically do not work with legal entities and individuals, they do not promote products, they do not have a large number of offices. These companies are clearly focused on servicing of certain commercial organizations. How can a regulator without introducing risk-based supervision detect "gray" schemes of work? What kind of market is, such is the supervision.
– Insurers are not afraid of the fact that the National Bank will have the right to inspect companies more often. Another fact is worrying. Everywhere there is a human factor, and the NB employees, like all people, have their own opinion and can make mistakes. Moreover, there have been court precedents when insurers could prove their case. The big question from the point of view of observing of constitutional rights for protection of one's interests, how is it possible to challenge someone's judgment in court?! Namely, it will be introduced under risk-based supervision. Judgment is not a fact that can be regarded as a violation of the law, this is an opinion, and it is impossible to challenge the opinion, since there is no object of appeal. Regarding this and other points of the system of risk-based supervision, we are now working with the National Bank.
– You assert that amendments to legislative acts on insurance activities that are already in the parliament can change the market.
– There are several prerequisites for this opinion. Let's start with the most famous one - customers of insurance companies will be able to enter into insurance agreements in electronic form through the websites of the IC. It is assumed that the same option will be extended to services for amendments making to the insurance agreement, termination of this agreement. Provision is made for the insurance organization to create the appropriate technical conditions for a person to apply to the insurers for the settlement of insurance cases in electronic form. I think this is very important.
Just think, creating of legislative conditions for convenience of using of the insurance service, when the client has an insurance event. I'm not talking about the fact that you can buy insurance policy without leaving home or office. I am sure that many insurers will create applications with which you can track not only the process of agreeing of the insurance payment, but also, for example, track car repairs at the service station.
This, of course, will lead to a qualitative development of the market.
– Will the introduction of secure and sophisticated e-sales software hit the pockets of insurers?
– Yes, and no: someone has already implemented what is envisaged by the draft law, someone is in the implementation stage, in my opinion, the implementation of the selling site, personal cabinet and the loss adjustment process - this is not a significant expense for the insurance organization. Another question is how to make an accessible and simple interface with the customer?
Subsequently, the electronic format will become a competitive advantage. And, of course, this should affect the demand of people. The closer, easier and more accessible it is, the easier it is to buy a product.
If we look a little ahead, we will see operational benefits from introduction of e-insurance. Now everyone is trying to save time and optimize costs. Look at the example of airlines: now they do not have ticket offices. People stopped going there. Everyone purchases tickets online. Probably, there are studies that have identified the amount of the aviator's economy by not renting premises, reducing the number of employees.
That is, this legislative norm over time will seriously reduce the types and amounts of spending insurers. And by reducing the operating costs of insurance companies to pay for insurance agents, you can restrain the growth of the cost of insurance products for the population and business.
– How will the amendments affect the customers of the IC that do not agree with the actions of their insurer?
– The powers of the insurance ombudsman are expanding. Now there are heated discussions in the Mazhilis about whether the institution of the insurance ombudsman will be a mandatory pre-trial instance of dispute resolution or not.
But you can be sure in one thing: the powers of the insurance ombudsman will be substantially expanded. We hope that the magistrate will also consider disputes on voluntary insurance classes. Of course, there will be some restrictions on the amount of payments, that is, the insurance agreements will not fall under the jurisdiction of the ombudsman for very large sums. However, even with this limitation in Kazakhstan, it is possible to develop a very good institution of pre-trial dispute settlement.
There are two reasons for this innovation. First: insurance is a business, and all its laws apply here. And this means that the customer must have the right to resolve the dispute with the insurer without trial. The second reason why the powers of the insurance ombudsman should be expanded is that insurance disputes are very specialized. They have a lot of nuances that you need to know and understand. And here the specialist in insurance law should work and know the subtleties that not only the customer, but also the insurer sometimes does not know.
The amendments also envisage creation of special conditions for simplifying of the access of the population to services of the ombudsman. The office of the arbitration judge of the insurance market is located in Almaty, so we want to simplify access for all the customers of all localities of the country. For example, there is a measure that the insurance company will help to contact the dissatisfied customer with the ombudsman. So, the insurer will be obliged to deliver all documents to the arbitrator at his own expense. This is done so that a person, when addressing an insurance ombudsman, is not at least spent on postage.
– Are the insurers agree to expand powers of ombudsman?
– Of course, the market agrees with this proposal.
Due to some cases, the opinion was formed that the employees of insurance organizations are ready to go to much, just to deny the customer an insurance benefit payment. This is not true. Insurance companies pay, otherwise our market would simply not work. In general, there is a wonderful proverb that approaches the situation with insurance payments: "Give a dog an ill name and hang him." Do not think that all insurers prefer to refuse in benefit payments!
It is also a great misconception to consider that in developed countries the customers of the IC are satisfied with the companies. There are also courts and disputes. But there on both sides hired expensive lawyers who work for very large fees.
One has to understand one thing: there is no ideal insurance agreement in the world and there is no ideal insurance event. There are nuances everywhere, so the market needs an arbitrator. Disputes were, are and will be, but the fact that we modernize the consideration of disputes and make the system available to customers is correct.
– Will the new amendments affect the shareholders and top managers of insurance companies? Will they regulate the work of insurers?
– Some items have not been discussed in the Parliament yet and will not share this information.
But I can tell you that the current amendments introduce two new classes of insurance: insurance of space objects and owners of space objects. This proposal is quite logical, since Kazakhstan has satellites and, of course, they must be insured. I cannot yet tell you about the estimated cost of these policies. The cost of the service is a relative category, but the fact that premiums are significant is the fact, and the price depends on how this risk is later placed in reinsurance. And this depends on the specific market conditions.
In addition, upon amendments making in the country, conditions will be created for insurance and reinsurance pools. The insurance pool is an association of insurers, created on the basis of an agreement between them in order to ensure financial stability. The insurance pool is not a legal entity. Creation of pools will be able to leave most of the premiums in the country. Indeed, today an unlimited amount of money of IC goes abroad to reinsurance organizations, and creation of pools will change this scheme.
Full text of the interview: https://www.kursiv.kz/news/finansy/vitalij-verevkin-strahovoj-rynok-na-poroge-bolsih-peremen/