About 95% of insurers to place reserves via special depositories - source
MOSCOW. April 23 (Interfax) - Up to 95% of insurers will place reserves through special depositories after the relevant amendments to insurance legislation in Russia are adopted, a source on the insurance market told Interfax.
"If amendments that directly affect life insurers and insurers with mandatory insurance licenses come into effect, up to 95% of Russian insurers will start to work through special depositories," he said.
"Requirements to carry out operations through special depositories will affect OSAGO insurers and companies that insure passenger carrier liability and the owners of dangerous objects," he said.
Insurers will not only have to place reserves for mandatory insurance through special depositories but all other reserves and equity, the source said.
"The government instructed FFMS [the Federal Financial Markets Service] to include amendments on special depositories when drafting a series of amendments to insurance legislation for a second reading."
"We must note a tougher supervision trend on the insurance market. And it is not selective but total and, perhaps, excessive," the source said. The package of proposals includes an amendment that bans the use of assets such as promissory notes from being used when placing insurance reserves.
"What is so unreliable about Sberbank or VTB promissory notes? And why reject promissory notes if a large share of insurer reserves are controlled by special depositories?" the source asks.
"The insurance watchdog will not have a full picture of the structure and placement of insurance reserves and equity even if there is a special depository controlling their formation and placement," he said.
"During technical discussions, special depository representatives acknowledged that they cannot adequately assess such assets that are allowed for reserve and equity coverage as reinsurance share or receivables on insurance operations," the source said.
Another result of the innovation is unavoidable: almost all insurance companies will have to pay special depository commission, although initially it was just to apply for life insurers.
