The Ministry of Finance of Belarus has begun preparing the concept of the law “On Insurance Activities”. Natalya Novikova, Deputy Head of the Main Department of Insurance Supervision of the Ministry of Finance, spoke about the proposed innovations in a material published in the journal Finance. Accounting. Audit, BelTA informs.
So, it is proposed to establish common approaches to the work of insurance organizations of various forms of ownership. As a result, non-state insurers will expand opportunities in terms of compulsory insurance and property insurance of state legal entities, and for state insurance organizations – when placing and investing their own funds and funds of insurance reserves.
Liberalization of the reinsurance system is envisaged, including a phased reduction in the size of compulsory reinsurance. The need for such changes has been repeatedly pointed out by experts from the World Bank and the International Monetary Fund.
The bill should reflect the issues of licensing the activities of insurance organizations. So, now, if an insurance company violates licensing requirements and conditions, the Ministry of Finance is obliged to make a demand to eliminate the violations in 6 months. If the insurer did not do this, even for objective reasons, the Ministry of Finance must first suspend and then terminate the license. “For the insurance company, this actually entails the transfer of the insurance portfolio and liquidation. But not all violations require such a tough approach,” said Natalya Novikova. Therefore, theMinistry of Finance intends to propose another system that would allow the regulator to assess how the insurance company corrects the situation, provide it with a longer time to eliminate violations and not to suspend the license.
The concept of the law also provides for the return of licensing to insurance brokers. Previously, it acted, but was canceled in 2011 due to the underdevelopment of the institute. However, the Ministry of Finance draws attention to the fact that at that time there were only 6 brokers, and now we have 30. At the same time, the functions of insurance brokers have been significantly expanded. “Returning to licensing of insurance brokers, on the one hand, will increase their status, on the other hand, it will provide the regulator with an effective mechanism to protect the interests of insurers, insurance organizations, the state,” Natalya Novikova believes.
In addition, the Ministry of Finance proposes to consolidate the foundations of investment life insurance in the bill. This is a product that combines life insurance and a financial instrument that allows you to earn income by investing part of the money deposited in various financial assets, such as bonds or precious metals, etc. The insurance premium of the client is divided into the guaranteed part and the investment. The insurance company invests the guaranteed part in conservative financial instruments with fixed income; the income received allows us to ensure the guaranteed payment amount. The investment part is invested in high-yield, but at the same time high-risk financial instruments, due to which a substantial investment income is expected.
In preparing the draft law, it is planned to return to differentiating the sizes of the minimum authorized fund of insurance companies (today it is the same for everyone).