Insurance supervision in the Russian Federation

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Insurance is a legal contract. In it, the insurer undertakes to assume the possible risks of the other party - the insured. All legal relations between the insurer and the policyholder must be documented in the form of a contract.

In order for the client to receive the amount upon the occurrence of an insured event, there is a special state supervision over the work of all insurance companies. And it is for these purposes that insurance activities must be licensed. What is, in essence, insurance supervision, and what are its functions?

Insurance supervision in Russia

The insurance organization assumes the risks specified in the contract under certain conditions and for a certain fee. In order not to go bankrupt, each company must have actuaries - those employees who calculate the degree of probability of an event. Actuaries must have the necessary qualifications.

Revenues from purchases of policies must cover costs in order for the organization to continue to be solvent and perform its functions in the country's economy. In addition, some types of insurance in Russia are mandatory. For example, notarial practice insurance.

Insurers, buying a policy, are fully protected from the consequences of a possible disaster. In all countries of the world, insurance agencies accumulate significant sums. And the fulfillment of their obligations must be closely monitored.

If the client does not receive compensation for damages or receives a smaller amount than specified in the contract, trust in such organizations is lost.

Who oversees insurance companies?

During the transition to a market economy in the harsh 90s, when the state structure was being rebuilt, the Supervision Department under the Ministry of Finance performed the functions of supervision over insurance agencies and private insurance services since 1996. Since 2004, all powers of supervision have been transferred to the Federal Service of the Ministry of Finance.

In 2011, the FSIS was abolished. The functions of the FSSN were performed by the FS according to Fin. markets and the Bank of the Russian Federation. At the moment (since 2013) all these functions of supervision of insurers are performed by the Insurance Market Department under the Central Bank of the Russian Federation.

Legislation governing insurance and supervision of the insurance business

How is insurance regulated? Insurance supervision in the Russian Federation is carried out on the basis of Chapter 48, Part 2 of the Civil Code. Licensing is carried out on the terms established by Order No. 02–02/08. And he alth insurance is subject to the law "On He alth Insurance" dated 06/29/91.

Functions of insurance supervision

Insurance supervision in the Russian Federation as an integral system performs the following essential functions:

• Department enforces insurance laws.
• Certification of actuaries.
• Issues or revokes licenses.
• Ensuring a unified state policy.
• Standard-making function.
• Control of subjects of the insurance business. Preventing their bankruptcy.

Of course, one of the main functions is to protect the rights of policyholders. The department also issues permission to insurance agencies to increase their authorized capital or permission to open a branch of an agency with foreign investment in Russia.

Besides, an important point is the state control of the insurance market, in order to prevent monopoly in this market. The Antimonopoly Committee also constantly monitors insurers.

Principles of insurance supervision

The insurance supervisory authority has certain powers. He has the right to conduct an audit and punish the administratively guilty or start a case in court. But the supervisory body itself is also subject to certain principles, since it is also a subordinate structure.

Insurance supervision is carried out on the principles:

1. Legalities. State-established laws are subject to all public authorities and all officials.
2. Organizational unity. Both the territorial branches and the central one act as a whole.
3. Glasnosti. The principle means that all information about the activities of the Department is in the public domain. It is published online forthe general public so that everyone has access to information. Also, each insurance company is simply obliged to provide the public with their financial indicators for analysis of their competitiveness. Truthful data regarding the financial condition of the insurance company will help the policyholder to navigate in the choice, if he has not yet decided which company he should apply to.

Thus, the Department can control the insurance business in Russia and make sure that all subjects obey the same legal requirements, and insurers invest money calmly, without worries.

The purpose of insurance supervision in Russia

The state and the main market players should "hear" each other and work together. This is in the interests of both parties. Therefore, insurance supervision involves setting the following goals by the Department:

• Formation of the interest of potential consumers of insurers' services.
• Further construction of the state supervision system
• Guaranteeing the fulfillment by insurers of obligations to issue money
• Forming the insurance market infrastructure.
• Training new personnel.
• Creating conditions for investing in insurance.

All the control measures taken by the insurance supervision of the Russian Federation contribute to the development of the insurance market.

It should be noted that this control also regulates the activities of foreign companies and companies with a predominant share of foreign capital. The insurance services market in the Russian Federation should becivilized, which means that the tax policy for insurance companies should be improved.

How is insurance activity supervised?

The activities of the Insurance Market Department are carried out through the creation of regulations and control over their implementation.

Insurance supervision in the Russian Federation can influence the market in the following ways:

• explains some issues that fall within the competence of the insurance supervisory authority;
• gives information from the unified register of insured subjects or the register of various associations of insured subjects;
• acts on the control of the license for insurance activities;
• license revocation acts.

Supervision is mainly aimed at the development of the insurance business, it is not carried out with the aim of hindering it. Therefore, such control is carried out in the interests of both the clientele and the insurance agency itself.

Responsibility of the parties in accordance with the laws of the Russian Federation

For violation of the conditions described in the contract, both parties (both the insurer and the policyholder) bear full responsibility. The insured is protected by the Consumer Protection Law. For violation of rights, the consumer of insurance services has the right to demand moral damage.

The insurer may not pay compensation in the event that the client of the insurance company is guilty of the event. Indeed, for the laws of the Russian Federation, all market entities are equivalent.

There is also a provision that says that an individual who is required by law to insure but does notinsured, may be sued. In more detail, all the relations of these subjects are covered in Chap. 48 "Insurance" of the Civil Code.