OREANDA-NEWS. February 17, 2011. The Federal Antimonopoly Service (FAS Russia) held the first meeting of the Working Group for developing proposals about amendments to the legislative acts of the Russian Federation on insurance in the part of clarifying the scope of reference of insurance intermediaries, reported the press-centre of FAS Russia.

The Working Group comprises representatives of the Russian Ministry of Finances; Rosstrachnadzor (Russian Insurance Supervision Service); FAS Russia; participants of the insurance market; consulting and legal firms; as well associations of insurers and insurance intermediaries.

Members of the Working Group discussed the issues of legal status, the scope of references and liability of insurance agents and insurance brokers, liability of the insurers for actions undertaken by their insurance agents, and the international experience of regulating the work of insurance intermediaries.

Members of the Working Group pointed out that No.4015-1 Law of the Russian Federation “On Organising Insurance Business in the Russian Federation” of 27th November 1992 defines two types of insurance intermediaries: insurance agents and insurance brokers. These insurance intermediaries are competitors but they operate in different competitive conditions. For instance, insurance brokers must obtain licenses and file reports to insurance supervisory bodies, while insurance agents operate without licences and report only to the insurer.

Insurance brokers cannot exercise activities not related to insurance. The law of the Russian Federation on insurance does not set such restrictions to insurance agents.

At the same time the insurance law does not delineate the functions of insurance brokers and insurance agents: both can receive remuneration from insurers and represent the interests of several insurers. It leads to the conflict of interests on the market of the services of insurance intermediaries.

Summing up the discussion, the Working Group decided to draft within seven days its proposals on the following issues:

1. Developing the standards of services of insurance brokers to provide equal conditions for entry of insurance intermediaries to the market.

2. Finding the ways to eliminate the conflict of interests on the market of services of insurance intermediaries, including:

– defining the right of insurance agents to represent the interests of a single insurer for all types of insurance or the interests of several insurers for different types of insurance (risks);

– defining the right of insurance brokers to receive remuneration from insured as well as insurers provided brokers disclose in advance information about the size of their remuneration;

– acknowledging the need for the Register of Insurance Agents;

– introducing insurer’s liability for unfair conduct of their agents concluding a new agency contract (“an insurance agent’s portfolio”).

Based on the members’ proposals, documents will be drafted to be discussed at the next meeting of the Working Group in the middle of March 2011.