OREANDA-NEWS  On 03 June was announced, that the Federal Antimonopoly Service (FAS Russia) terminated the antimonopoly proceedings against "Residential Mortgage Agency" OJSC (“AIZhK” OJSC) and 50 insurance companies, initiated upon the bank and the insurers signing cooperation agreements for insurance personal and property interests of the borrowers under the Mortgage Credit Programme of "AIZhK" OJSC.

The FAS Russia's Commission, investigating the case, found that the agreements between "AIZhK" OJSC and insurers - respondents to the case violated Clause 4 Part 1 Article 11 of the Federal Law "On Protection of Competition" as they resulted (could have resulted) in economically and technologically unjustified refusal of "AIZhK" OJSC to conclude agreements with other insurers.

FAS Russia concluded that such agrements between "AIZhK" OJSC and 45 insurance companies, signed before 2008, violated Clause 1 Part 1 Article 11 of the Federal Law "On Protection of Competition", which forbids fixing rates for insurance services in the agrements between economic entities.

The FAS Russia's Commission terminated the proceedings due to voluntary elimination of the antimonopoly violations and their consequences by "AIZhK" OJSC and the insurance companies.

For instance, before the case was initiated, "AIZhK" OJSC and the insurance companies had signed additional agrements to exclude the clause on maximum overall insurance rates for the types of insurance, included in the credit contract, from the cooperation agrements.

Voluntary eliminating the antimonopoly violations, the Board of Directors of "AIZhK" OJSC introduced the following amendments to the Standard procedures for granting, refinancing and servicing mortgage credits (loans):

1) formed public and exhaustive list of requirements to insurance companies, aimed at assessing financial stability and solvency of an insurance organisation; the requirements are clearly formulated and do not allow ambiguous interpretation;

2) specified the requirements of minimum insurer's experience of operating on the market (3 years);

3) introduced quality indicators characterising insurer's efficiency;

4) withdrew the mandatory requirement on insurer's rating;

5) excluded the procedures for setting a limit for the overall premium collected by an insurer in terms of its cooperation with the Agency.

Having assessed economic efficiency of insuring the risk of causing harm to borrower's health and survival, the Board of Directors of "AIZhK" OJSC decided to introduce an alternative product without mandatory insurance of the above risk.

To create conditions for developing robust competition between selected insurance companies, AIZhK" OJSC established a possibility of extending the list of insured risks under the insurance contracts, signed when a mortgage loan is granted, without approval by the Agency; as well as possibility to change an insurer while a credit agreement is still valid.

Upon introducing the above amendments to the standards, "AIZhK" OJSC notified all insurers on unilateral termination of the cooperation agreements.