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Russian insurers suggested the Central Bank to weaken the regulation of medium-sized companies

The insurance lobby sent proposals on introduction of proportional segment regulation to the Central Bank, Kommersant.ru informs. It is proposed to loosen the regulatory pressure, i.e. not to increase the limit of the charter capital (120 million rubles) for companies collecting less than 1 billion rubles of premiums per year; to switch monthly reports into a quarterly regime; to exclude the recommendation on the availability of a backup site to ensure continuity of activity; and to remove requirements for higher education for Heads of branches and quarterly reports of the internal auditor. More than half of the market participants claim for exemption, 141 insurance companies.
Russian insurers suggested the Central Bank to weaken the regulation of medium-sized companies

At a roundtable on proportional regulation in the financial market at the International Finance Congress Igor Yurgens, president of the All-Russian Union of Insurers (ARIA), stated that the companies with collections of less than 1 billion rubles could move to a more flexible regulatory regime. The market offers on the topic have already been sent to the Central Bank. "I feel we are heard there", the Head of ARIA shared his feelings.

Kommersant daily got acquainted with the proposals of the insurance lobby. According to them, 141 insurers out of 225 collect less than 1 billion rubles a year. Together they accounted for 2.9% of market fees in 2017 (35 insurers, collecting more than 5 billion rubles, make up 88.3% of the market). For small and medium-sized companies, ARIA proposes not to increase the minimum charter capital of 120 million rubles. But in the State Duma, amendments on raising the index for universal insurers to 300 million rubles, for life insurers - up to 450 million rubles (now 240 million rubles.), and for reinsurers - up to 600 million rubles (now 480 million rubles) by the end of 2022 are being prepared for the second reading.  According to the ARIA estimates, with the requirements increasing to 300 million rubles about 80 insurers will be in the risk zone.

It is also proposed for medium-sized companies to exclude the requirement for a quarterly report of the internal auditor, switch them from monthly to quarterly reporting and reduce its detail, and remove a number of excess industry requirements. Also in the ARIA, they would like to save small companies from having to comply with the recommendation of the Central Bank on the organization of a backup office (it should duplicate the work of the main office to ensure continuity in critical situations) and exclude the requirement for higher education for the heads of branches and board members. The proposals for deregulation in the ARIA presentation are explained by the fact that it is important for the industry to maintain a "geographically distributed supply of insurance services". ARIA, however, does not ask for mitigating the control over the paying solvency of insurers: the unification of the requirements for it "looks absolutely justified."

According to Igor Yurgens, there are more than two hundred insurers in Russia, while in a smaller Germany there are 800 of them, and 40% of the local market is controlled by the international giant Alianz. "In spite of that, all companies find opportunities for business operations", he says. According to Vladimir Skvortsov, Head of AlfaStrkhovaniye, he agrees that a small company cannot physically meet all the requirements that large insurers can. "Less strict regulation for small and medium-sized businesses is possible, but it should not affect paying solvency", he told Kommersant daily. Besides, in his opinion, regulatory incentives should not include companies with compulsory types of insurance.

According to Kommersant's information, the regulator has preliminarily approved at least two ARIA proposals: the transition to quarterly reporting and the lowering of reporting specification. According to the Deputy Chairman of the Central Bank, Vladimir Chistyukhin, the Central Bank will publish the main approaches to establishing the principles of proportional regulation by the second half of 2018.

Photos per websites: l2w.kz, agropolit.com

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