Financial stability of insurance undertakings: new requirements following the introduction of Solvency II
In 2019, the Bank of Russia altered its approaches to regulation of risk –weighted assets when evaluating insurers’ financial sustainability. Moreover, the Bank of Russia is reviewing new initiatives to amend approaches to calculating the volume of insurance reserves.
The goal of introducing a risk-based approach to regulating insurers’ financial sustainability aims is to make the insurers more resilient and to enhance the protection of consumers.
Why does it take the insurance sector so long to accept new technology?
To stay competitive today, insurers must keep up with the pace of technology. Online promotion of insurance services, automatic generation of individual insurance products and insurance rate, and the rapidly developing tools for remote claims settlements – these are the technologies that make insurers’ operations more effective and client-oriented.
But even though insurers are beginning to introduce such new solutions to their business processes, there are still quite a few factors in the way of their full-scale implementation: online activities of insurance agents are subject to restrictions, automated exchange of information with federal executive authorities’ databases is not allowed for insurers, risks of insurance fraud remain high, and the industry as a whole remains remarkably conservative in its focus on personal communications with clients.
Do we need a guarantee system for life insurance?
The Bank of Russia seeks to increase consumers’ trust in establishing long-term savings with insurance undertakings and to protect the investments of life insurance consumers, and to this end we have suggested introducing a guarantee system for the life insurance market.
Such system is supposed to make the public more interested in long-term savings with insurance undertakings. Is the market interested in such a system?
Disclosing information on insurance products
In the coming years, one of the key growth factors for the insurance market will be an increase in consumer trust towards insurance companies and products, the level of which still has room for improvement. This kind of trust largely depends on properly understanding the product and its value for the consumer.
Disclosing full and objective information on an insurance product is supposed to bring new customers to the market and spur recurring sales. But should everything be disclosed and what is the right way to do it?
