The Russian insurance market is regulated by the Central Bank, and the regulator pays special attention to the insurance segment in general and life insurance in particular. At the year beginning, the regulator came up with a number of initiatives to additionally control the sale of life insurance policies and suggested introducing some restrictions on insurers’ work. According to financial experts, a number of excessive innovations by the Central Bank will negatively affect the insurance business and, ultimately, consumers who will not be able to get affordable and familiar financial products. The Central Bank prepared a number of regulatory measures that should become mandatory by the fall, but many initiatives are controversial among the insurance community.
The discussion, for example, flared up around the establishment of the so-called cooling period, that is, the period during which the consumer can cancel the policy and get his money back. According to the Central Bank’s initiatives, he can do this before the third installment on the life insurance policy. In this case, the contradiction arises: the insurance company provides full insurance coverage already from the first installment and forms a financial reserve for the corresponding risks, that is, the insured can, in fact, use the policy free of charge until the third installment.
Besides, insurers did not agree with the Central Bank's proposal on the coefficients for calculating the insurance coverage on the “death for any reason” risk. According to business representatives, this completely changes the existing market practice and affects the risk assessment. The All-Russian Union of Insurers (ARIA) noted that introduction of coefficients may lead to disappearance of products for a mass customer, because they will be used without taking into account the client’s actual state of health, and these are additional risks.
Nevertheless, the Central Bank relaxed several requirements for life insurance contracts in August, after talking with market representatives. The regulator's interaction with business continues: the parties are jointly looking for compromises that would protect citizens and not to harm the market. The Central Bank is open for insurers’ suggestions.
The innovations of Bank of Russia are also directed against misselling, unfair practices of some insurance agents and bankers that mislead consumers. The insurance community itself is fighting this phenomenon by adopting general rules for the policy sale and conducting awareness campaigns with consumers. And this is paying off, as consumers are less and less complaining about life insurers: according to the regulator, only 1,073 cases have been registered in the 1st HY 2021, this is 0.1% of their current portfolio.
The life insurance market is one of the most sustainable and reliable today. In 2021, the Central Bank revoked the licenses of 15 banks, but there was not a single case of life insurer bankruptcy. The regulator is planning to extend government guarantees to the segment, as is the case with bank deposits and DIA.
The insurance market, including the life insurance segment, is actively moving towards digitalization. This process is supported by the Central Bank: the regulator's initiatives in the field of digital development by 2024 include all the key proposals of insurers.
Photos are from open sources.