With life on the sidelines – Newspaper Kommersant No. 195 (7396) of 10/20/2022

Shared life insurance (DSZh) may appear on the insurance market. It is similar to foreign unit-linked and combines insurance protection with investments, while the insured himself chooses a strategy and is responsible for the result. Market participants believe that DSZH will attract new customers and make the market more transparent. However, experts warn that the risk of such an instrument is higher than that of endowment and investment life insurance policies.

A new type of investment product may appear on the insurance market – shared life insurance (DSZh). The corresponding bill was submitted to the State Duma by Anatoly Aksakov, head of the committee on the financial market.

It follows from the bill that the DSZh agreement combines insurance coverage and investments. At the same time, the insured independently chooses the units in which he invests, forms an investment portfolio, changes its structure, giving appropriate instructions to the insurance company. The policyholder is also responsible for the final result and investment risk. The amount of the sum insured or the redemption amount under the contract will mainly depend on the market value of the units acquired. At the same time, the DSZh will provide the same benefits as voluntary life insurance – a special inheritance procedure and tax benefits.

Experts note that for policyholders, LIJ is a more risky product than the usual accumulative and investment life insurance policies (NSZh, ILI).

According to Olga Lyubarskaya, Senior Director for Insurance Ratings at Expert RA, in HOA and ILI, the return of the paid insurance premium is usually guaranteed, since part of the funds is invested in potentially more profitable, but also more risky instruments, and the other in conservative instruments, including deposits or government bonds that can compensate for a possible drawdown of risky instruments. That is, in HOA and ILI, the client can only lose income, while in HOA there is a risk and loss of part of the investment. Tatyana Nikitina, senior director of ratings for financial companies at NRA, draws attention to fines for terminating an agreement and rather high commissions for conducting operations.

At the same time, ARIA Vice President Viktor Dubrovin notes that in the current situation, the private investment market is not in the best shape, many risks have materialized, problems with both the quality and quantity of assets, and avoid the vast majority of risks and at the same time receive insurance protection, tax preferences, and investment returns.

The insurer will need to either have a license from the management company to carry out investment fund management activities, or transfer funds to the management company, the bill says. Therefore, the deputy general director for financial and operational activities of AlfaStrakhovanie – Life, Vladimir Gude, notes that the bill is designed to increase competition between several market segments that were previously isolated from each other. The head of Sovcombank’s insurance group, Igor Lappi, believes that the DSZh will attract more experienced investors into insurance, who previously could invest either independently or through trust management.

Ms. Nikitina notes that if all funds are transferred to trust management, an additional license will not be needed. However, according to her, the mechanisms for regulating companies with different types of licenses have not yet been determined.

Julia Poslavskaya