THE FAS RUSSIA ADVOCATES PROHIBITING COLLECTIVE INSURANCE OF BORROWERS FOR BANKS

In this way, the FAS plans to protect the interests of borrowers and competition in banking insurance market

Marina Pishchulina, Deputy Head of the Department for Control over Financial Markets of the FAS Russia, announced this at a general meeting of members of the All-Russian Union of Insurers.

She drew attention of the meeting participants to the agency's plans for the development of competition in the near future. In particular, Marina Pishchulina clarified that the Federal Antimonopoly Service is working on issues related to the distortion of competition in the bank insurance market.

“In practice, the FAS Russia is often faced with the desire of banks to insure the risks of their borrowers with a limited number of insurers. At the same time, the bank provides the borrower with a formal choice of an insurance organization, or the opportunity to refuse the insurance service, but significantly increasing the interest rate on the loan,” the representative of the FAS Russia said.

According to her, the latter situation is most typical for the voluntary accession of borrowers to collective insurance agreements, when the borrower's insurance does not affect the bank's decision to issue a loan, and the direct choice of the insurer remains with the bank. In such circumstances, the volume of insurance concentrated in one or two insurance organizations can reach 100% of the total volume of insurance contracts concluded when issuing loans by one bank.

The current situation has a negative impact on competition. Competitive insurers do not have the opportunity to compete for potential customers, and borrowers, accordingly, receive insurance services on more favorable terms.

“The FAS Russia considers it appropriate to prohibit credit organizations from collectively insuring borrowers when they issue loans,” Marina Pishchulina said.

As part of her report, she also spoke about the implementation of the current Roadmap for the development of competition [1] in the insurance market, namely, monitoring the tariff policy of the insurance market entities, as well as the principles and features of its implementation.

Marina Pishchulina also touched upon the development of competition in the voluntary medical insurance market for employees of large employers [2] and improving the legal framework for the activities of mutual insurance societies [3].

At the end of her speech, the Deputy Head of the Department for Control over Financial Markets of the FAS Russia invited market representatives to join the discussion of the authority's plans with proposals for developing competition in the insurance market.

[1] The Action Plan (Roadmap) for the development of competition in sectors of the Russian economy and the transition of certain spheres of natural monopolies as a natural monopoly to the competitive market in the 2018 – 2020 approved by the Order of the Government of the Russian Federation No. 1697-p of August 16, 2018

[2] Paragraph 16 of the Roadmap

[3] Paragraph 15 of the Roadmap