Borrowers may choose their insurer: information letter from Bank of Russia and FAS Russia
Consumers are entitled to independently choose an insurer from those who meet the bank’s criteria and change it at any time during the term of a loan agreement. It is inacceptable to urge a borrower to choose a particular insurance company or give any preferences on this occasion, including in the form of a lower interest rate. The Bank of Russia and the Federal Antimonopoly Service (FAS Russia) reminded credit institutions thereof.
The bank should inform clients within seven business days from the date of submitting the documents whether the provided insurance policy is acceptable or justify its refusal. If the bank refuses to accept the insurance contract and raises the loan interest rate, the borrower may submit another policy. If it complies with the bank’s requirements, it is recommended that the interest rate be reduced to the previous level.
In addition, credit institutions should simplify the accreditation process for insurers and automatically accept those who have credit ratings. Furthermore, banks may independently determine their own acceptable rating scale, but the cut-off line may not be higher than A-. This will expand the choice of insurance companies and help reduce the cost of policies for consumers.