Bank of Russia adjusts requirements for investment insurance products
Following the discussion with the professional community regarding the minimum requirements for investment life insurance (ILI) and endowment life insurance (ELI) policies, the Bank of Russia is planning to enhance insurance coverage under both ILI and ELI agreements. This draft ordinance has been published once again to evaluate its regulatory impact.
Insurers will be obliged to stipulate in ILI and ELI rules that the risk component of policies becomes effective from the date of the first insurance payment and the insurance payout in the event of an insured person’s death shall be at least twice the amount of the insurance premium.
Insurance shall also cover changes in an insured person’s health over the effective period of the agreement. An insurer may only expand the standard list of exceptions from insurance coverage provided for by civil law by adding cases where an insured person dies while being drunk or when a customer misinforms the insurer about socially important diseases on record.
The draft contains the previously specified rule for extending the cooling-off period for policies with regular insurance payments until the date of the third payment. This approach is needed because clients initiate the cancellation of agreements mostly after making the second payment. The cooling-off period will actually last for at least six weeks, taking into account the schedule of the first three payments proposed by the regulator, and for policies with a lump-sum payment — 30 days.
Based on the recommendations given by insurance market participants, the draft ordinance now does not include the provision on minimum guaranteed returns on ILI and ELI policies. Nonetheless, insurers will be obliged to disclose historic returns on insurance agreements to clients, which will help protect consumers’ rights.
The revised draft ordinance will be discussed with the market community.