OREANDA-NEWS. July 12, 2012. The Insurance Services Section of FAS Expert Council for Protecting Competition on the Market of Financial Services discussed agreements on reinsurance pooling to reinsure civil liability risks of hazardous facilities owners for inflicting harm in an event of an accident on hazardous facilities, reported the press-centre of FAS Russia.        

Representatives of the Federal Financial Markets Service, “Nationalnaya Strakhovaya Gildia” and “OPORA Rossii” Non-Commercial Partnership, the National Union of Liability Insurers, insurance companies and independent experts took part in the meeting.

The discussion of reinsurance pooling agreements was organized upon petitions from insurance companies to FAS Russia.

Participants exchanged opinions regarding conformity of reinsurance pooling agreements to the Law on Mandatory Insurance of Hazardous Production Facilities, the law of the Russian Federation on insurance, the antimonopoly law, usual and customary business practice, and international practice.

In particular, experts expressed opinions that reinsurance conditions, the techniques and the procedures for determining the size of self-retention of insurers, additional financial encumbrances related to joining the pool, specified in the pooling agreement, will not allow many insurance companies to reach positive financial results on mandatory insurance operations. Thus, it would violate Part 1 Article 23 of the Law on Mandatory Insurance of Hazardous Production Facilities in the part of financial stability of insurance operations on mandatory insurance.

Experts also put forward proposals that one of the methods of supporting competition is establishing certain conduct rules directly by regulators on the insurance market.

“FAS does not exclude that some conditions of the work of insurers on the market of mandatory insurance that now are established by professional associations of such companies must be determined by the state”, pointed out Deputy Head of FAS, Andrey Kashevarov.

The Expert Council proposed to forward opinions and proposals on the raised issues to FAS Russia, and underlined that FAS should continue analyzing pooling agreements and developing its position.