On 15th April 2008, the Expert Council for Protection of Competition on the Market of Financial Services, at the Federal Antimonopoly Service (FAS Russia), and the Expert Council at the Federal Service for Insurance Supervision (Rosstrakhnadzor) held a joint session to discuss the requirements of credit organizations for insurance products and financial stability of insurance organizations.
The members of the Expert Councils discussed the briefing note «Competitive aspects of co-operation between banks and insurers», prepared by FAS Russia for the session.
The session participants pointed out that for the purposes of offering consumer credits, the credit and insurance organizations are engaged in intensive co-operation, particularly, in insurance of the property pledged to the credit organizations, life and health insurance of the borrowers and their civil liability insurance.
Co-operation between credit and insurance organizations is mostly based on the Co-operation Agreements (contracts). Such Agreements often make provisions for regulating insurance rates, imposing unfavorable contract terms or the terms that are not relevant to the subject matter of the contract upon the borrowers, and also create obstacles for other economic agents entering the market, which restricts competition on the insurance and banking market.
One of the main objectives of the joint session of the Expert Councils at FAS Russia and Rosstrakhnadzor was to find out the opinion of the community on the bank requirements to the insurance companies and insurance products. It was specially emphasized that the banks should accept policies of any insurance organizations that satisfy the requirements and such requirements must be «transparent».
According to FAS Russia, to avoid ambiguity in relationship between the banks and the insurers, it is necessary to set legal standards as to when such agreements are permissible.
In 2008 FAS Russia plans to devise a draft Decree of the Government of the Russian Federation «On establishing the standards of permissibility of the agreements and concerted actions between credit and insurance organizations in offering credits to physical persons». Developing this document requires a productive dialogue with the banking and insurance community.
In follow up of the session of the Expert Councils at FAS Russia and Rosstrakhnadzor, it was decided to form the Working Group for formulating proposals on the above draft Decree of the Government of the Russian Federation.
The Working Group will include representatives of FAS Russia, Rosstrakhnadzor, members of the Expert Councils at the Federal Services, as well as representatives of the Association of Russian Banks, the All-Russian Union of the Insurers and rating agencies.
