Five days’ cooling-off period in insurance extended to two weeks

The so-called cooling-off period – during which a consumer is entitled to abandon enforced or superfluous insurance – will be extended to 14 calendar days.  The relevant BoR Ordinance, registered by the Ministry of Justice, becomes effective on 1 January 2018.

A full or partial insurance premium refund within five working days became possible in summer 2016. Extending to almost all major types of insurance, it has proved to be an effective consumer protection tool in the insurance industry. Following the introduction of the cooling-off period, there was a steady decline in the numbers of complaints to the regulator related to additional services enforced in contract execution. For the first seven months of 2017, these complaints decreased almost threefold on the same period of the past year.

Furthermore, the Bank of Russia informs all concerned consumers that the new cooling-off period regulation also enables them to request a refund of insurance premiums paid as part of a consumer loan agreement with tied insurance.

More often than not, consumers need more than five days to contact the insurer to request that this insurance contract be cancelled. According to a BoR-conducted monitoring survey, many insurance companies took a step further and offered their clients longer cooling-off periods than statutorily required.

Extended cooling-off periods, while providing the legal ground for consumers to opt out of voluntary (but tied) insurance, comes as an enhancement of the rights and legal interests of policy holders as it also serves to diminish the negative effects of unscrupulous market players’ practices.