Guarantee scheme concept in life insurance: discussion starts

The Bank of Russia has developed a concept of a guarantee scheme in life insurance. The regulator discussed its key points with the Ministry of Finance in a meeting on 22 October. Moving forward, there are plans to seek experts’ and market players’ feedback.

Once the guarantee scheme is in place, it will boost public trust in long-term saving enabled by insurers and secure the safety of investments made by individuals holding life insurance policies.

The scheme will be modelled after principles guiding deposit and pension saving insurance schemes. Should an insurer file for bankruptcy, its liabilities under a life insurance contract to an individual equal or less than 1.4 million rubles will be covered from a guarantee fund generated by insurers’ instalments. There are no plans to put investment income guarantee in place, should it be provided under a life insurance contact.

The Deposit Insurance Agency will act as the guarantee scheme administrator. Membership in the scheme will be mandatory for all insurance companies offering life insurance.

The scheme is scheduled to become operational no sooner than 2021.