Insurance Supervision in the Russian Federation

Insurance is a legal contract. In it, the insurer undertakes to assume the possible risks of the other party - the insured. All legal relations between the insurer and the insured must be documented in the form of a contract.

In order for the client to receive the sum when the insured event occurs, there is a special state supervision over the work of all insurance companies. And it is for these purposes that insurance activities should be licensed. What is, in essence, insurance supervision, and what are its functions?

Insurance Supervision in Russia

The insurance company assumes the risks specified in the contract, under certain conditions and for a fee. In order not to go bankrupt, each company must have actuaries - those employees who calculate the probability of an event. Actuaries should have the necessary qualifications.

Revenues from policy purchases should cover expenses, so that the organization would continue to be solvent and perform its functions in the country's economy. In addition, certain types of insurance in Russia are mandatory. For example, insurance of notarial practice.

The policyholders, when buying a policy, are fully protected from the consequences of a possible disaster. In all countries of the world, insurance agencies accumulate significant amounts. And the implementation of their obligations should be closely monitored.

If the client does not receive damages or receives a lower amount than indicated in the contract, the trust to such organizations is lost.

Who oversees insurance organizations?

In the transition to a market economy in the harsh 1990s, when the state structure was rebuilt, the supervision function of insurance agencies and private insurance services was carried out by the Department of Supervision under the Ministry of Finance. Since 2004, all powers of supervision have been transferred to the Federal Service of the Ministry of Finance.

In 2011, the FSIS was abolished. The functions of the FSIS were performed by the FS on FIN. Markets and the Bank of Russia. At the moment (starting in 2013), all these functions for the supervision of insurers are performed by the Insurance Market Department under the Central Bank of Russia.

Legislation regulating insurance and supervision of insurance business

How is insurance regulated? Insurance supervision in the Russian Federation is carried out on the basis of Ch. 48 part 2 of the Civil Code. Licensing is carried out on the terms established by order No. 02-02 / 08. A health insurance is subject to the law "On Health Insurance" of 29.06.91.

Functions of insurance supervision

Insurance supervision in the Russian Federation as an integrated system performs the following major functions:

• The Department monitors compliance with insurance legislation.
• Conducts certification of actuaries.
• Gives or picks licenses.
• Ensuring a unified state policy.
• Rule-making function.
• Control of subjects of insurance business. Prevention of their bankruptcy.

Of course, one of the main functions is to protect the rights of policyholders. The department also issues insurance agencies permission to increase the authorized capital or permission to open in Russia branch of the agency with foreign investment.

In addition, an important point is the state control of the insurance market, in order to prevent a monopoly in this market. The Antimonopoly Committee also constantly monitors insurers.

Principles of Insurance Supervision

The body of insurance supervision is endowed with certain powers. He is fully entitled to inspect and punish administratively guilty persons or to start a case in court. But the oversight body itself also obeys certain principles, since this is also a subordinate structure.

Insurance supervision is carried out on the principles:

1. Legitimacy . The laws established by the state are subject to all government bodies and all officials.
2. Organizational unity. Both the territorial branches and the central one act as a single whole.
3. Publicity . The principle means that all information about the activities of the Department is present in the public domain. It is published on the Internet for the general public, so that everyone has access to information. Also, each insurance company is simply obligated to provide its financial indicators to the public for analyzing their competitiveness. True data on the financial condition of the insurance company will help orient the insured in the choice, if he has not yet decided which company he should turn to.

So, the Department can monitor the insurance business in Russia and ensure that all subjects are subject to uniform legal requirements, and the insured people calmly, without anxiety, invest money.

The purpose of insurance supervision in Russia

The state and the main market players should "hear" each other and work together. It is in the interests of both parties. Therefore, insurance supervision presupposes the setting of the following objectives by the Department:

• Formation of interest of potential consumers of services of insurers.
• Further development of the system of state supervision
• Guaranteeing the fulfillment by the insurers of obligations to issue money
• Formation of insurance market infrastructure .
• Training of new staff.
• Creating conditions for investing in the insurance industry.

All those control measures that are undertaken by the insurance supervision of the Russian Federation, contribute to the development of the insurance market.

It should be noted that this control also regulates the activities of foreign companies and companies with a predominant share of foreign capital. The market of insurance services in the Russian Federation should be civilized, which means that the tax policy for insurance companies should be improved.

How is insurance carried out?

The activity of the Insurance Market Department is carried out through the creation of regulatory acts and control over their implementation.

Insurance supervision in the Russian Federation can affect the market in the following ways:

• Clarifies some issues that fall within the competence of the body of insurance supervision;
• Gives information from the single register of insurance subjects or the register of various associations of insurance entities;
• Acts on the control of the validity of a license for insurance activities;
• Acts on the revocation of the license.

Supervision is mainly aimed at the development of the insurance business, it is not carried out with a view to hindering it. Therefore, such control is carried out in the interests of both the clientele and the insurance agency itself.

Responsibility of the parties in accordance with the laws of the Russian Federation

For violation of the conditions described in the contract, both parties (both the insurer and the policyholder) bear full responsibility. The insured is protected by the "Law on Consumer Protection." For the violation of rights, the consumer of insurance services is entitled to claim moral damage.

The policyholder may not pay compensation in the event that the client of the insurance company is guilty of the event. After all, for the laws of the Russian Federation all market entities are equivalent.

There is also a provision that says that an individual who is legally obliged to insure, but not insured, can be summoned to court. In more detail all the relationships of these subjects are covered in Ch. 48 "Insurance" of the Civil Code.