| Almost 15% of auto insurers are close to losing profitability In the third year of the mandatory “motor citizen” policy, the maximum level of permissible loss ratio (the ratio of payments to premiums minus expenses) was reached by 23 out of 165 Russian insurance companies engaged in this type of insurance. This was stated yesterday by Deputy Director of the Department of Financial Policy of the Ministry of Finance Vera Balakireva at the 12th International Conference on Insurance of the CIS and Baltic Countries. According to Ms. Balakireva, the level of unprofitability of these companies exceeds 77%, this figure is the limit, since according to the law on compulsory motor liability insurance, 23% of the amount of insurance premiums is allocated to insurers for business expenses (RVD).
Data on the unprofitability of compulsory motor liability insurance in the Russian Union of Auto Insurers (RUA) are similar. According to the head of the union's methodology department, Vladimir Kozlov, the payout ratio for compulsory motor insurance (the ratio of payments to collected premiums) in the fourth quarter of 2004 was 42%, in the first quarter of 2005 - 46%, and in the second quarter of 2005 - already 51% , or 75-77% minus RVD.
This news hardly came as a surprise to the insurance market. Over the past six months, MTPL licenses have been revoked from five companies - "Avest", West Siberian Transport Company, "Doverie", Euro-Asian Insurance Company, Insurance Society of the Commonwealth of Independent States), suspended from three - "Promenergoresurs" (formerly " Komestra-Center"), FSO "Stolichnoe", "Ural-Recipe". Since mid-September, RSA began making payments to victims of clients of companies with revoked licenses. The amount of losses left by these insurers is estimated by experts at 600 million rubles. So far there are enough funds for payments - the RSA reserves are about 1 billion rubles. (RSA members transfer 1% of each policy sold to the guarantee fund). But if the number of companies leaving the market adds up to dozens, the money will quickly run out, and the law on compulsory motor liability insurance does not say where to get additional funds. “RSA and Rosstrakhnadzor should concentrate their efforts on monitoring key indicators of the solvency of insurers participating in the mandatory auto insurance,” says Denis Bryzgalov, executive director of the Agency for Mass Insurance Communications.
Recently, more and more auto insurers are talking about the impending collapse of the auto insurance market. Thus, according to Igor Yamov, Deputy General Director of Ingosstrakh, the MTPL market is rapidly entering a crisis phase of development. “A number of companies, the number of which is measured in dozens, are on the verge of a crisis,” he believes. According to Mr. Yamov’s forecasts, the peak of the compulsory “motor citizen” crisis will occur in the winter, and by spring the situation should stabilize. From this moment on, it will become clear which players will ultimately remain in the MTPL market.
“The OSAGO market is only for very large companies that can live on a small margin,” says Igor Ivanov, deputy general director of RESO-Garantiya. “Only those insurers who reserved the funds received during the first two years of operation and did not spend them will survive the crisis of the “automobile insurance policy.” General Director of Renaissance Insurance Nikolai Klekovkin notes that “high loss rates for compulsory motor liability insurance in those regions where territorial coefficients were set incorrectly and small insurers who only worked there were driven out of the market.” “I don’t think that the car market will face a crisis,” he says. “The loss ratio of OSAGO in Renaissance Insurance is at the level of 50-60%, so we are calm.” According to Mr. Ivanov, Russian auto insurers “need to wait until the moment when OSAGO tariffs will be regulated by the market itself, as is done in the West.”
Thus, the issue of increasing insurance rates for compulsory motor liability insurance is becoming increasingly relevant. However, just last week, the director of the financial policy department of the Ministry of Finance, Alexei Savatyugin, said that the government does not plan to change the base rate at least within the next year. This means that the insurance market will have to tighten its belt, and clients will have to be more careful when choosing a company.
The Ministry of Finance has prepared two bills with amendments to the law on compulsory motor liability insurance , Vera Balakireva told Interfax. The first amendment clarifies the procedure for early termination of the MTPL contract in the event of a replacement car, change of car owner, as well as in the event of insolvency of the insurer. The second bill with amendments to the law on compulsory motor liability insurance includes a number of more significant points. First of all, this is due to the distribution of the insurer’s liability in an accident where several people were injured, and the establishment of a liability limit not for one insured event, but for each victim. In addition, the Ministry of Finance bill contains an amendment clarifying the concept of “internal territories”. The Ministry of Finance's amendments to the law on compulsory motor liability insurance will also affect the validity periods of policies (they will be shortened, and seasonal policies will be introduced for legal entities). Some amendments, according to the Ministry of Finance, should serve to introduce a European protocol system - easier registration of minor road accidents without the participation of traffic police representatives. Gyuzel GUBEYDULLINA |
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