The cost of OSAGO policies in the DPR and LPR will be calculated with coefficients

The Bank of Russia clarified the application of OSAGO tariffs in the “new territories”. Coefficients affecting the cost of the policy will be applied according to general rules, while the territorial is set at a minimum level. According to experts, this was done to increase the loyalty of motorists and attract insurers.

The Central Bank reported that they are developing a regulatory framework for the introduction of OSAGO in the DPR, LPR, Zaporozhye and Kherson regions from January 1, 2024. Thus, all coefficients that affect the price of the policy, including “bonus-malus”, engine power, driving experience and age, restrictions on the list of persons allowed to drive, as well as the period of use of the car, will apply to motorists from these regions “in to the full extent.” At the same time, the territorial coefficient for calculating the cost of an OSAGO policy for residents there will be minimal – 0.68, follows from the draft regulator’s instructions.

A similar coefficient is applied in the settlements of the Crimea, Yakutia and the Trans-Baikal Territory. The All-Russian Union of Insurers believes that the coefficient of 0.68 “corresponds to the level of risk for small territories, as a rule, the loss ratio is lower there”, respectively, the calculation is “quite fair”.

As explained in the Central Bank, for individuals, the territorial coefficient is determined on the basis of the address of registration in the passport or certificate of registration of the vehicle, for legal entities – on the basis of a certificate of registration with the tax authority.

The Central Bank and the Ministry of Finance announced the development of “ways to launch insurance in new territories” this spring. According to experts, the main areas may be types related to liability insurance. First of all, these are compulsory types of insurance – OSAGO, compulsory insurance of civil liability of owners of hazardous facilities (OS HPO), and also the developer’s liability insurance (CMR) under government contracts will be extremely important. At the same time, potential market participants are frightened by the lack of a regulatory framework, an understanding of potential unprofitability, since difficulties may arise with the inspection of property, its assessment and acceptance for insurance (see Kommersant of May 23).

“In developing the financial market in the new constituent entities of the Russian Federation, the regulator faces a difficult dilemma. On the one hand, it is necessary to ensure barrier-free entry of participants to local insurance markets. On the other hand, disruption of financial stability and the accumulation of risks both in the context of insurance market participants and in terms of regional local financial niches should not be allowed,” notes independent expert Andrei Barkhota.

According to Kommersant’s interlocutor in the market, “the situation with the development of insurance in new territories resembles the Crimean scenario.” He believes that only “a few insurers” should be expected to enter this market. However, after 2014, “everyone was afraid of the sanctions and acted very carefully,” and today some companies are already under sanctions – it is they who can take the initiative, the Kommersant source notes. In this regard, he believes, the mega-regulator has created “the necessary conditions for motivation to enter new regions.” The anchor product, according to Kommersant’s interlocutor, will be liability insurance, and “OSAGO is perfect for this purpose.”

However, Mr. Barhota emphasizes, “new territories in any case are associated with high risks for insurers, in particular, for OSAGO”. The main risk for both insurers and customers is the same – whether the results of shelling, sabotage and explosions will be recognized as an insured event or force majeure. If such events are included in the insurance coverage perimeter, market participants will have to “calibrate the product and sales funnel to prevent planned losses.” In the event of massive refusals to pay, the expert explains, “insurers will be disappointed, and OSAGO will turn into a kind of tax.”

Julia Poslavskaya