Insurers and their agents to warn customers about major risks, when selling policies

The obligation to advise customers of major risks related to a prospective insurance product and essential elements of an investment life insurance (ILI) contract is a Bank of Russia requirement. This extends to, specifically, the calculation of investment income, the statement of no guaranteed investment income, a refund procedure at contract termination, and a notification that the Deposit Insurance Agency does not cover investment under insurance contracts.

The Bank of Russia notes a rise in ILI-related claims including those about payments of income upon contract expiry that mismatch customer expectations.

Insurers and their agents have been offering customers ILI policies with low entry thresholds recently and their sale involves a greater risk of customer misinformation about core product features.

Mandatory disclosure of product information is intended to ensure customer protection in the insurance sector. It will help customers select an investment product that best suits their needs.

The proposed regulatory changes are set to become effective before the end of 2018.