Life without guaranteed income – Newspaper Kommersant No. 83 (7045) from 05/19/2021

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The Bank of Russia has revised its requirements for the sale of investment and endowment life insurance policies, softening their first version. Now insurers will not be obliged to provide a minimum guaranteed profitability, and the period of “cooling”, when it is possible to cancel the policy without losses, will not be two years, as insurers feared, but a month and a half. Nevertheless, the insurer will be obliged to justify the name of the product and cover the risk of death for any reason from the moment the first installment is paid – to pay 200% of the premium paid to him or to return all premiums upon surviving.

The Central Bank posted on its website a new version of the draft instructions on the requirements for life insurance. As Kommersant already wrote, the first version of the document appeared at the end of January and made a lot of noise in the market – insurers assured that excessive tightening of sales rules and product structure would collapse the life insurance segment with annual fees of 430.5 billion rubles. Then the Central Bank insisted on a two-year period of refusal from such contracts without loss of contributions, a minimum guaranteed return on accumulative and investment life insurance policies (NSZH and ILI), etc. (see “Kommersant” on January 26).

Now, after consultations with the market, the regulator, to facilitate the insurers, removed the provision on the minimum guaranteed profitability for such products. As an interlocutor in the market explains to Kommersant, companies previously practiced promising customers up to 2% guaranteed profitability, but quickly realized that this requires excessive reserves and cuts off the path to investing in highly profitable, but risky instruments. In addition, the Central Bank has now clarified that “at the entrance” the insurer may not take for insurance clients with diseases from the list of socially significant, as well as cirrhosis of the liver and cardiovascular diseases. Refusal to pay can be in case of “death of the insured due to intent or gross negligence” and “in a state of alcoholic, drug or toxic intoxication (poisoning).” In all other cases, the insurer must pay at risk of death 200% of the payments made by the client under the policy, and if the client lives until the end of the policy, return all paid premiums to him. The contract with the insurer can be terminated without loss until the third payment, but the period between payments should not exceed two weeks – previously there was no such clause, which made it possible to terminate the contract without loss of contributions even in the third year of its validity.

The Central Bank also described in detail which memo should be issued to the client – for example, in the upper right corner of the first page (for the convenience of the consumer, the memo will be in the form of a table) in large “numbers and capital letters in red” are prescribed amounts in rubles – payments for survival, investment income, paid bonuses and guaranteed income, if any. The company is obliged to disclose the “historical” profitability of the product for the last three years, the amount of the agency fee and its percentage for the fulfillment of obligations under the contract, the calculation of investment income, etc. — only ten points.

According to the vice-president of the All-Russian Union of Insurers Viktor Dubrovin, “the radicalism that was in the first version of the Central Bank’s instructions has gone, and we are grateful to the regulator for being heard.” However, according to him, the current version will still complicate the sale of long-term policies and change the business processes of insurers (in particular, they will be able to pay a commission to agents only a month and a half after the conclusion of the contract), and the amount of information provided to the client will slow down the interest of consumers, who may feel that such products are too difficult. The requirement of the Central Bank to return to the client 100% of the contributions at the end of the contract, according to Mr. Dubrovin, does not take into account the payment to the insurer for the risk – in long-term contracts (up to 30 years), it can reach up to 10% of all customer contributions.

The insurance lobby hopes to continue discussions with the regulator on the project.

Tatiana Grishina


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