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The emotional impact of insurance agents in Russia to be leveled by the "cooling period"

The Council for Entrepreneurial Development of Russia sent an information memo to the Council of Ministers on certain aspects of the domestic insurance market. It says particularly about better regulation of the insurance agents’ work, reports
The emotional impact of insurance agents in Russia to be leveled by the "cooling period"

According to the press service of the council, a number of meetings with participation of representatives of the Ministry of Finance of the Russian Federation, the Ministry of Taxes and Levies of the Russian Federation, as well as insurance organizations and insurance brokers were held with the purpose of elaborating proposals for the development of the domestic insurance market. Earlier, the State Control Committee found that one of the most serious problems in insurance was the excessive activity of insurance agents.

The conclusion of the discussion was to find a legal settlement of issues related to the involvement of individuals, including individual entrepreneurs, by the insurance broker to cooperate on the basis of civil law contracts.

However, the implementation of this mechanism entails certain risks, including the risk of simultaneous termination of a large number of insurance contracts and the need to return insurance premiums for the duration of their action. These practices widespread in various countries, including Russia and Ukraine, have a high economic and social effect, because, on one hand, it allows to inform the general public about existing insurance offers, and, on the other hand, it provides employment and additional income of citizens.

For example, in Belarus, a person having insured his life, even in the absence of an insurance event, has the right to demand the return of the entire amount of insurance contributions, with the exception of expenses for conducting insurance case (about 8% of the amount of contributions). Upon termination of the insurance contract, the insurance companies indisputably recover the full amount of the commission paid to the broker, and the broker, having paid earlier the remuneration to the employee and contributions to the NSSF, loses them irretrievably, the report said.

The procedure for determining the amount of the redemption value of the insurance policy needs improvement. Also, the meeting participants concluded that the amount paid by the insurance company to the broker should not be subject to return, which will minimize its risks associated with the inability to pay early termination of insurance contracts.

The second major risk is related to poor quality of intermediary insurance services.

In order to avoid this, it is advisable to oblige insurance brokers to provide regular training for their employees, both those involved under employment and civil-law contracts.

To make sure that all important aspects of the insurance contract are explained to the person wishing to insure himself, it is recommended to develop and issue a memo containing all explanations to the insured person.

"In order to avoid the practice of impulsively concluding an insurance contract by an individual (on emotions or under the influence of a poor consultation given by an insurance broker, etc.) it is proposed to establish a "cooling period" during which, after concluding the contract, the client has the right to terminate the insurance contract and withdraw its contribution in full," the press service of the council said.

By results of the meetings, an information memorandum was sent to the government proposing the development of a draft document regulating the use of referral system in insurance, taking into account the international experience of the EU and EEA countries.


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