Insurance is a legal contract. In it, the insurer undertakes to assume the possible risks of the other side - the insured. All legal relations between the insurer and the policyholder must be documented in the form of an agreement.
So that the client must receive the amount upon the occurrence of an insured event, there is a special state supervision of the work of all insurance companies. And precisely for these purposes, insurance must be licensed. What, in essence, is insurance supervision, and what are its functions?
Insurance Supervision in Russia
The insurance company assumes the risks specified in the contract on certain conditions and for a certain fee. In order not to go bankrupt, each company should have actuaries - those employees who calculate the degree of probability of an event. Actuaries must have the necessary qualifications.
Revenues from policy purchases must cover costs so that the organization is still solvent and fulfills its functions in the country's economy. In addition, some types of insurance in Russia are mandatory. For example, notarial insurance.
Policyholders, when buying a policy, are fully protected from the consequences of a possible disaster. In all countries of the world, insurance agencies accumulate significant amounts. And the implementation of their obligations must be closely monitored.
If the client does not receive compensation for losses or receives a smaller amount than specified in the contract, trust in such organizations disappears.
Who oversees insurance organizations?
During the transition to a market economy in the harsh 90s, when the state system was re-built, the supervision function under the Ministry of Finance has been in charge of the supervision of insurance agencies and private insurance services since 1996. Since 2004, all supervision powers have been transferred to the Federal Ministry of Finance.
In 2011, the FSSN was abolished. FSSN functions were performed by FS in fin. markets and the Bank of the Russian Federation. At the moment (since 2013) all these functions for the supervision of insurers are performed by the Department of the insurance market under the Central Bank of the Russian Federation.
Legislation governing insurance and insurance business oversight
How is insurance regulated ? Insurance supervision in the Russian Federation is carried out on the basis of Chapter 48, part 2 of the Civil Code. Licensing is carried out on the terms established by order No. 02-02 / 08. And health insurance is subject to the law "On Health Insurance" from 06/29/91.
Insurance Supervision Functions
Insurance supervision in the Russian Federation as an integrated system performs the following critical functions:
- The department monitors compliance with insurance legislation.
- Carries out certification of actuaries.
- Issues or selects licenses.
- Ensuring a unified state policy.
- Normative function.
- Control of insurance entities. Prevention of their bankruptcy.
Of course, one of the main functions is to protect the rights of policyholders. The department also issues permission to insurance agencies to increase the authorized capital or permission to open a branch of an agency with foreign investment in Russia.
In addition, an important point is the state control of the insurance market, in order to prevent monopolies in this market. The Antimonopoly Committee also constantly monitors insurers.
Principles of Insurance Supervision
The supervisory authority is endowed with certain powers. He is quite entitled to conduct an audit and punish administratively guilty or start a case in court. But the supervisor itself also obeys some principles, since it is also a subordinate structure.
Insurance supervision is carried out on the principles of:
- Legality . The laws established by the state are subject to all public authorities and all officials.
- Organizational unity. Both the territorial branches and the central one act as a whole.
- Publicity . The principle means that all information about the activities of the Department is publicly available. It is published on the Internet for the general public, so that everyone has access to information. Also, each insurance company is simply obligated to provide its public with financial indicators for the analysis of their competitiveness. True data on the financial condition of the insurance company will help the policyholder to navigate in the choice, if he has not yet decided which company he should contact.
Thus, the Department can control the insurance business in Russia and ensure that all entities comply with the unified legal requirements, and insurers invest money calmly and without worries.
The purpose of insurance supervision in Russia
The state and the main market players must “hear” each other and work together. It is in the interests of both parties. Therefore, insurance supervision requires the Department to set the following goals:
- Formation of interest of potential consumers of services of insurers.
- Further construction of the state supervision system
- Guaranteeing the fulfillment by insurers of obligations to issue money
- Formation of the insurance market infrastructure .
- Training new staff.
- Creating conditions for investing in the insurance industry.
All the control measures undertaken by the insurance supervision of the Russian Federation contribute to the development of the insurance market.
It should be noted that this control also regulates the activities of foreign companies and companies with a predominant share of foreign capital. The market of insurance services in the Russian Federation should be civilized, which means that the tax policy for insurance companies should be improved.
How is insurance activity supervised?
The activities of the Insurance Market Department are carried out through the creation of regulatory acts and control over their implementation.
Insurance supervision in the Russian Federation can affect the market in the following ways:
- clarifies some issues that are within the competence of the supervisor;
- provides information from a single register of insurance entities or a register of various associations of insurance entities;
- acts on the control of the validity of a license for insurance activities;
- license revocation acts.
Supervision is mainly aimed at the development of the insurance business; it is not carried out with the aim of preventing it. Therefore, such control is carried out in the interests of both the clientele and the insurance agency itself.
Responsibility of the parties in accordance with the laws of the Russian Federation
For violation of the conditions described in the contract, both parties (both the insurer and the policyholder) bear full responsibility. The policyholder is protected by the Consumer Rights Protection Act. For violation of rights, the consumer of insurance services has the right to demand moral damage.
The insurer may not pay compensation if the client of the insurance company is guilty of the incident. Indeed, for the laws of the Russian Federation, all market entities are equivalent.
There is also a provision that says that an individual who is required by law to insure himself, but not insured, can be summoned to court. In more detail, all relations of these subjects are covered in chap. 48 "Insurance" of the Civil Code.