Bank of Russia adjusts requirements for insurers’ capital
The purpose of new requirements is to enhance financial stability and solvency of companies. The requirements are stipulated in the regulator’s ordinance which will become effective on 25 September.
In particular, a progressive scale of the requirements for capital of CMTPL insurers, whose share in this segment exceeds 15%, will be introduced as a preventive measure. The amount of the premium will be determined at the end of each quarter. This will reduce the impact of the risk of loss of financial stability by certain major insurers on the CMTPL segment in general. Currently, such companies do not need additional capital, as they have enough insurance reserves.
The document allows insurers to take into account the price of non-traded shares of major issuers with high credit quality when calculating their capital. The regulator guarantees the implementation of the earlier announced support measure, that is, a gradual write-off of the value of blocked assets by instalments in the following ten years for companies which fail to pay dividends. In addition, in order to reduce the burden on capital and develop companies’ business, the ordinance changes the requirements for creating insurance reserves.
The innovations also expand insurers’ investment opportunities for supporting the structural transformation of the economy. Owing to their significant capital cushion, insurers will be able to buy project bonds in larger amounts.