Policyholders will receive payments if the insurer’s license is revoked
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On Wednesday, November 1, the State Duma adopted in the first reading a bill on a life insurance guarantee system. Its operator will be the Deposit Insurance Agency (DIA). According to the new rules, payments in the event of revocation of an insurer’s license will be made from the fund for guaranteeing rights under life insurance contracts, formed, in particular, from contributions from insurance companies.
The minimum rate of guarantee contributions, according to the bill, will be 0.003 125% of the calculation base. However, it is possible to increase it to 0.2%. The guarantee payment will be received by transferring funds to a bank account. The payment amount will be 2.8 million rubles, except in cases of death, when a limit of 10 million rubles will apply.
According to independent expert Andrei Barhota, insurers previously independently made payments to policyholders in such cases if the amount of capital was positive. At the same time, according to the general director of IC RSHB-Strakhovanie Andrey Chuiko, the initiative is aimed at increasing the protection of the rights of consumers of insurance services and increasing confidence in life insurance.
“Life insurance is a long-term product, where the terms of insurance can be decades, and there may be no confidence that the insurance company will not leave the market during this period. Therefore, for clients this may be an obstacle to concluding long-term contracts,” notes Olga Basova, senior director for ratings of insurance and investment companies at Expert RA. And if the insurance payment is guaranteed by the DIA, “the level of citizens’ confidence in life insurance will increase, which can give a new impetus to the development of life insurance,” she believes.
The level of the minimum deduction rate is quite attractive for life insurers and does not create an additional burden on the product, adds Evgeniy Sharapov, director of insurance company ratings at the NKR agency.
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