Amendments to the General Exceptions on agreements between credit and insurance companies

Lilia Belyaeva: new provisions of the Government Decree will enhance transparency of interaction between credit and insurance companies

On 20 May 2017 comes into force No. 487 Decree of the Government of the Russian Federation  “On amendments to No. 386 Decree of the Government of the Russian Federation of 30 April 2009” of 24.042017.

The Decree makes a number of changes to the General Exceptions on agreements between credit and insurance companies, approved by No. 386 Decree of the Government of the Russian Federation of 30 April 2009.

First, the validity period of the General Exceptions is extended for five years – until 2022.

Second, from the date of the Decree coming into force, agreements between credit and insurance companies that determine the procedure of their interaction in the course of insuring borrowers will be allowed under the antimonopoly law at specified conditions.

For instance, from 20 May 2017, for the agreements to be allowed, credit organizations that are the party to such agreements, must, along with the currently established conditions, observe some other conditions, including:

- No requirements for mandatory numbers of employees and staff composition

- Borrowers should be made aware of the consequences of concluding insurance agreements with the insurance companies that do not meet the requirements of a create company

- Set possible periodicity (no often than quarterly) for the procedure of confirming that insurers meet the requirements established by a credit company, as well as possible periodicity of making amendments directly to such requirements (no often than once in six months, except certain cases)

- No restrictions for insurers in terms of the deadlines for repeated inspections to verify conformance with the requirements set by credit companies if the causes of earlier revealed discrepancies are eliminated.

In 2016, those and other changes were discussed with representatives of the banking and insurance markets at FAS Expert Council for protecting competition on financial markets; and the concepts were supported by the experts.

Commenting the amendments to the General Exceptions, Head of FAS Department for Control over Financial Markets, Lilia Belyaeva said: “New provisions to the General Exceptions on agreements between credit and insurance should enhance transparency of interaction between credit and insurance companies, achieve relative predictability of their conduct under the frame of such cooperation and simultaneously reduce possibilities of some participants to abuse their rights and cut the costs for maintaining the interaction in question”.