Bank of Russia explains procedure for returning insurance premiums on combined insurance during cooling-off period

The same procedure for returning insurance premiums in cases where the policyholder cancels a contract during the cooling-off period as under regular private insurance contracts is also applicable to combined insurance contracts, which provide cover across several types of insurance. The Bank of Russia has prepared the following information letter with an explanation.

The cooling-off period — the period during which it is possible to cancel imposed or unnecessary insurance contracts — has been established by a Bank of Russia ordinance as at least 14 calendar days. Should the policyholder cancel an insurance contract during the cooling-off period, the insurance company is obliged to return the premium paid for the policy in full provided the insurance contract has not entered into force. If the contract has come into effect, the insurer is within its rights to return the money minus part of the premium proportional to the number of days that have passed since the start of the contract. The cooling-off period applies to almost all popular types of insurance, with the exception of certain types including, for example, travel insurance.

The Bank of Russia has been receiving complaints that in cases of cancellation of combined insurance contracts during the cooling-off period, insurers have been withholding part of the insurance premium that falls under travel insurance and other types of insurance excluded from the regulator’s ordinance. In its information letter, the regulator writes: withholding part the premium is not in line with Bank of Russia requirements as the entire insurance premium of combined insurance contracts should be returned even if part of the premium accounts for insurance types that are not governed by this ordinance.