OREANDA-NEWS. October 13, 2009. The representatives of Ingosstrakh IJSC took part in the 5th International Conference “Development of Insurance Intermediary Market" held in Moscow on October 8-9, 2009.

The Conference was attended by the broker community, car dealers, top managers, heads of sales departments and managers responsible for relations with intermediaries of insurance and reinsurance companies. They discussed various issues of interaction between insurance intermediaries and insurance companies, as well as the situation in the broker services market, regulation of competition in financial markets, situation and trends in the corporate insurance market, interaction between insurance companies and banks with the intermediary support of insurance brokers, etc.

Tatiana Lavrova, Head of Liability Insurance Department of Ingosstrakh IJSC, delivered a presentation about “Liability Insurance under Public Contracts – Current Status and Prospects”. In her presentation, she stated, inter alia, that according to the Federal Insurance Surveillance Service, the market volume of the public contract insurance amounted to RUB 2.1bln over the first half of 2009 and totaled RUB 2.1bln, the reinsurance market was RUB 412mln, of them 80% was transferred to insurers of a doubtful reputation. The rate of compensations paid for this type of insurance doesn’t exceed an average of 2-3%.

Low loss ratio, especially as compared with compensations paid under bank guarantees has discredited insurance as a form of security for the regulator. This, in turn, has resulted in exclusion of insurance as security from e-trading, and there’s a possibility that it won’t be accepted as security by customers from the public sector (as in the case of the Moscow Government, for example).

According to Ms. Lavrova, the main problem in insurance of public contracts is the lack of recourse and reinsurance capacity.  This problem can’t be resolved without changing the liability coinsurance mechanism. Therefore, the insurance community represented by the National Union of Liability Insurers is currently developing a concept of a new insurance product – an insurance guarantee. It’s different from a usual guarantee as it can be issued only by insurance companies.  There will be reserves formed for this type of insurance, which are the same as reserves for insurance of risks.

Insurance guarantee could be used not only for public contracts, but in a number of other cases, too: for clients of travel agents, for payment of customs duties as issued by professional customs intermediaries and importers. “It is difficult to assess prospect of transition to insurance guarantees, since this will require amendments to a number of legal acts, - Lavrova said. – However, this mechanism is the only correct and efficient one”.

Deputy General Director of Ingosstrakh IJSC Nikolay Galushkin also delivered a presentation on “Corporate Situation and Development Trends”.