OSAGO of special rules – Newspaper Kommersant No. 230 (7431) dated 12/12/2022

The Central Bank decided not to establish a territorial coefficient for OSAGO for motorists from the DPR, LPR, Zaporozhye and Kherson regions. In many regions, such a coefficient increases the cost of policies, but, for example, in the Crimea, it reduces their cost. Experts and market participants believe that the rejection of the coefficient will not save residents from the inflated cost of OSAGO, since not all insurers will be ready to issue policies. According to lawyers, the situation will inevitably require state intervention and support.

For motorists of the DPR, LPR, Zaporozhye and Kherson regions, the cost of the Russian OSAGO policy will be calculated without a territorial coefficient, follows from a letter from the Central Bank to insurers dated early December. Russian OSAGO requirements will come into effect in these areas in two years, but a policy is required for driving in other regions.

The calculation of the premium under the OSAGO agreement is made by multiplying the base rate of the insurer by a number of coefficients. The maximum rates and coefficients are set by the Central Bank. The decision not to apply the coefficient may be due to the fact that for these territories it is not defined in principle, according to the Russian Union of Motor Insurers (RSA). The Bank of Russia did not respond to Kommersant’s request.

The PCA believes that the rejection of the coefficient will make OSAGO cheaper. For example, in Moscow and Kazan, the territorial coefficient is 1.8; in St. Petersburg – 1.6; in Vladivostok – 1.36. However, the multiplier can also be decreasing. Thus, when Crimea was annexed by Russia, the territorial coefficient was set at 0.6, that is, motorists could receive a discount to the base rate of 40%.

“The size of the coefficient depends, for example, on the accident rate of the region and the number of cars, since, as a rule, the more cars are registered in the territory, the more problems,” explains one of the market participants. In his opinion, there is no reduction factor in the DPR, LPR, Kherson and Zaporozhye regions, because “the peninsula was joined with clear boundaries and without armed actions.”

According to Anton Shaparin, vice-president of the National Automobile Union, despite the zero coefficient, the prices for OSAGO in these regions “will generally be comparable to the Crimean ones”. According to the OSAGO.Online portal, a policy costs 1.4–11 thousand rubles on the peninsula. However, the general director of Zetta Insurance, Igor Fatyanov, believes that the cost of policies will be “higher than the average for Russia”, amounting to about 10 thousand rubles, “due to the lack of insurance history, reducing coefficients cannot be applied when calculating the cost of policies.”

In addition, market participants believe that residents may generally have difficulty purchasing policies. One of the insurers says that “we should expect a repetition of the Crimean scenario, when companies from the second ten mainly went to the region, since the big players are more afraid of sanctions.”

Today, most Russian insurers will experience difficulties both with the implementation of policies and with the settlement of losses in these territories, said Alexander Tsyganov, professor at the Financial University under the Government of the Russian Federation. “In order to organize the insurance process, it is necessary to open representative offices and branches, to have repair facilities, which involves hiring new employees. Now it is difficult, there is no understanding of the size of the potential insurance field, the possibility of insuring not only OSAGO,” he says.

At the same time, Kommersant’s interlocutor from among the experts believes that there will be those who want to expand the client base in this way on the market, “in this case, the principle of “the premiums have been collected, and then how it goes” applies.”

Lawyers believe that in the end, to provide residents of the LPR, DPR, Kherson and Zaporozhye regions with insurance policies, state assistance will be required.

“Increased risks, lack of statistics, unwillingness of large companies to risk their assets reduce the involvement of businesses in these entities, so the state needs to change the legislative framework and create favorable conditions for attracting insurers, which concerns not only OSAGO, but also other areas,” explains the managing partner law firm “Position of Law” Egor Redin. Independent lawyer Irina Kuznetsova notes that it would be expedient to introduce a mechanism to reimburse the residents of these territories from the federal budget for part of the costs of OSAGO.

Julia Poslavskaya, Ekaterina Volkova