The life insurers are asking the Finance Ministry to postpone the establishment of a guarantee Fund until 2018

MOSCOW, October 29. The life insurers has asked the Finance Ministry to postpone the establishment of a guarantee Fund in case of bankruptcy of the companies and to revisit this issue in 2018. The position of the market participants represented in the letter from the Russian Union of insurers (TASS has the text of the letter).

The letter States that the life insurance market is under severe pressure from the economic situation, and additional burden on the companies to pay contributions to the guarantee Fund will create an additional burden on a net rate that will reduce the profitability of insurance policies, respectively, reducing the competitive advantages and the reduction of financial stability of insurers”.

The life insurers believe that the creation of the guarantee Fund will change the behavior of policyholders that will begin to look for the most attractive financial terms for life insurance policies without evaluating their performance, because in case of bankruptcy of the insurer compensates the Fund for losses incurred. As an example, insurers cite a situation with Bank depositors choose deposits with high profitability regardless of the financial stability of the Bank, since the Agency for Deposit insurance payouts.

An additional hazard can be deliberate bankruptcy of life insurers by their owners, which will be preceded by the offer attractive yield products with concurrent findings of the assets, the letter said.

With this in mind, the life insurers consider it appropriate to defer consideration of the establishment of a guarantee Fund until 2018. Up to this point, they argue, would create a self-regulatory organization in 2016, improving the monitoring of solvency and reserves of the companies, the introduction of permanent control over movement of funds insurers and also creating significant insurers in this market and transferring them to the monthly statements.

First Deputy Chairman of RF government Igor Shuvalov in may 2015 instructed to study the issue of expediency of creation of a guarantee Fund for life insurers by analogy with the DIA.