Roundtable Discussion ‘Interaction Between Insurance Companies’ Took Place
Roundtable discussion ‘Interaction Between Insurance Companies’ took place in Moscow
A roundtable discussion «Interaction between Insurance Companies and Specialized Depositories after July 1, 2015. How to Prepare to the New Requirements» has been held recently in Moscow. The event was organized jointly by INFINITUM and Insurance Today Media and Information Group.
The round table was attended by executives and employees of financial departments of insurance companies from different regions of the country and experts of INFINITUM, the market leader in the field of specialized depository control.
Article 26.2 «Accounting and Safekeeping of Securities Accepted to Cover Insurance Reserves and Own Funds (Capital) of the Insurer. Control over the Assets of the Insurer» of Law of the Russian Federation No.4015-I «On Organization of Insurance Business in the Russian Federation» dated 27.11.1992 comes into force on July 1, 2015. It provides for the obligation of insurers licensed for life insurance and mandatory insurance to transfer assets and information on reserves to specialized depositories from the date specified. Currently, the possibility to adjust this rule towards reducing the scope of requirements for mandatory control by specialized depositories (for life insurers and investment assets only) is actively discussed. However, in reality the new version of the proposed law is only prepared, but not adopted yet. The law amendment procedure is usually rather time-consuming, so it is not quite clear yet what regulation will be valid on July 1, 2015, when the requirement for control over insurance companies’ assets by specialized depositories comes into force.
The roundtable participants discussed the issues of legal regulation of specialized depositories’ activity in the insurance market, operating and upcoming regulations in this field. They considered the future obligations of insurers and specialized depositories, the terms to submit the data, the requirements of the Central Bank to specialized depositories’ regulations and accountancy submitted by specialized depositories to the regulator and serviced insurance companies.
Olga Krymova, Head of BCC Working Group, Deputy Chairman of the Board of SOGAZ OJSC, summarized the concerns of the insurance community regarding the practical implementation of the new rules under discussion. ‘Since there is no certainty that the new draft article 26.2 will have been approved by July 1, 2015, in theory, the insurers specified in the current legislation should prepare for working with specialized depositories. They will need to choose a specialized depository, to develop and harmonize the rules of interaction with them and prepare their IT system for the transfer of data.’ Krymova said that if daily monitoring of compliance with the structure of assets starts, the insurer is better to switch to monthly reporting voluntarily, but this will not exclude the comparison of data on different dates between which there will inevitably be serious discrepancies. The insurance company should be ready to quickly provide an explanation of the situation changes, for example, in the case of payments on large losses. In general, according to Krymova, ‘the problem is not one of transfer of assets to a specialized depository and asset quality control accepted for coverage, it is in the control over the coverage structure, which will be carried out on a daily basis — it contradicts the very essence of insurance company’s economy.’
Ekaterina Pechenkina, First Deputy Director General of INFINITUM, explained to the insurers numerous questions worked out in practice of the specialized depository’s work with management companies and private pension funds — this experience can also be applied when working with insurers. Infinitum’s experts gave a detailed description of what specialized depository services are for insurance companies, the structure of the work and how the payment for the services is calculated, what additional services besides the mandatory specialized depository control can be provided by the specialized depository.