OREANDA-NEWS  On 03 December was announced, that IJSC Ingosstrakh held a traditional seminar intended for regional journalists on the Russian insurance market, tendencies and development perspectives during the crisis.  The seminar was attended by 24 journalists from 16 largest cities of Russia: St. Petesrburg, Voronezh, Khabarovsk, Vladivostok, Chelyabinsk, Tyumen, Perm, Krasnodar, Rostov-on-Don, Krasnoyarsk, Novosibirsk, Irkutsk, Kazan, Nizhny Novgorod and Samara.

During the seminar regional mass media representatives were given an opportunity to discuss the most relevant challenges in the insurance industry in the situation of the global financial crisis with lead participants of the insurance market and representatives of government authorities. The reports during the seminar were made by the Director of the Federal Insurance Surveillance Service I.V. Lomakin-Kudriavtsev, General Director of IJSC Ingosstrakh A.V. Grigoriev, Insurance Methodology Director of the Russian Union of Car Insurers V.V. Kozlov, Deputy General Director of Expert Rating Agency P. Samiyev, Credit Analyst of Standard & Poor’s Ratings Services V. Nikolsky, Deputies of the General Director and Directors of Departments and various divisions of IJSC Ingosstrakh, and lead financial observers of federal mass media.

When speaking to the journalists, Ingosstrakh’s General Director Alexander Grigoriev focused on the financial challenges. According to him, the financial crisis will first ‘nail’ the United States, Europe will come next in six months, while Russia will be affected in nine months time.  9 months reports published by European insurance and reinsurance companies, i.e. Allianz, Zurich, Swiss Re, Munich Re, demonstrate losses. Consequently, the price of reinsurance for Russian companies will obviously grow, which means that the dumping activities of a number of Russian insurance may result in the default on insurance commitments. There are two ways to battle against this, Mr. Grigoriev believes. The first one is to establish direct control of the insurers through the Federal Insurance Surveillance Service (FISS), however, this option will require extra human resources, and there are none. The second option is to create an institute of independent actuarial auditors. Before submitting its reporting to the FISS, an insurance company will have to undergo an actuary audit of its reserves to comply with the requirements as to the level of reserves necessary to meet its commitments. If an insurance company fails to submit its reporting within six months, the insurer’s license will be subject to revocation.  ‘Moreover, it is necessary to identify a governmental authority in charge of developing the insurance industry. The insurance as such has to be released from the Law on Public Procurement, while there is a need for a federal law on insurance tenders. The government has to think about establishing special financial courts, while the insurers have to become IFRS compliant. So far there have been no initiatives in this respect,’ Mr. Grigoriev noted. He also shared the company’s plans under the conditions of the financial crisis. The company has already taken steps to prepare for the coming of the unfavorable period. Ingosstrakh is working on optimizing its costs: some projects that either require major investments or are not expected to provide return in the short-term perspective will be either scaled down or suspended.

During the Q&A session, the Director of the Federal Insurance Surveillance Service Ilya Lomakin-Kudriavtsev noted that volatile economics prompts a number of very specific steps, i.e. quick response of the FISS divisions to the dumping activities of insurers, monthly monitoring of regional companies to avoid the dangerous ‘shift’ in their insurance portfolios to less profitable types of insurance, i.e. compulsory civil liability motor vehicle insurance (OSAGO). According to Mr. Lomakin-Kudriavtsev, next year around 30 insurers actively operating in OSAGO, may be faced with a difficult situation. The topmost objective of the FISS as the regulating authority is to prevent insurance companies from taking French leave during the crisis, which would primarily affect the clients.

The Insurance Methodology Director of the Russian Union of Insurers Vladimir Kozlov told the journalists that today 13 insurers operating in OSAGO are already in the risk group, while 12 companies are under steadfast control of the RUI because of the numerous complaints on the part of insurants. The expert also informed that the Union has allocated the first billion rubles from its funds to settle the claims of the clients of bankrupt insurers.

The seminar was crowned by a round table discussion with representatives of federal mass media where regional journalists discussed the challenges and perspectives of insurance journalism, and shared examples of their professional practice.