Bank of Russia suggests updating requirements for insurers' capital
The regulator suggests introducing a progressive scale of requirements for the amount of capital of insurance companies whose share in the OSAGO (compulsory motor third-party liability insurance) segment exceeds 15%. Now the same coefficient is used to calculate the capital of all insurers without distinction.
The new approach will help improve market stability, increase competition in this segment, and protect consumers’ interests. These changes will make it possible to limit the exposure of such insurance to financial stability risks of companies.
This measure is of a precautionary nature, as insurers do not currently need additional capitalisation.
The amount of the capital add-on is assumed to be proportional to the increase in the insurer's share in the OSAGO segment, determined at the end of each quarter.
It is also planned to improve the accuracy of estimating the risk impact associated with a shortfall in premiums for all types of insurance. To do this, it is proposed to change the existing approach to provisioning and include a new factor in the calculation, namely the risk of early termination or modification of contracts.
The Bank of Russia will discuss possible changes with market participants in the near future.
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