The Central Bank wants to oblige insurers to guarantee income under investment and accumulative life insurance contracts (ISZH and NSZH, respectively) in relation to changes in the key rate. This will require a major overhaul of products, but could ultimately lead to higher sales, experts say.
The Central Bank partially took into account the comments of the All-Russian Union of Insurers (VSU) to the draft instruction No. 5968-U concerning ILI and NSZH. The project assumed that companies would be required to take into account the value of the Central Bank key rate when calculating the insured amount. The SJC requested that this paragraph be deleted from the guidance or adjusted.
The Union offered several options. The first way is to refuse changes completely. The second way is to recalculate the values so that the net premium for the risks “death from any cause” and “survival” does not exceed 70%. The third option is to use the zero-coupon yield curve of government bonds (OFZ) as an indicator. For ILI, VSS proposed to designate in the premium structure the share that forms investment income, and change it depending on funding rates.
According to partner B1 Tatyana Samsonova, initially the insured amount under the ILI and NSL contracts in the event of the risk of survival or death being realized was equal to the amount paid by the policyholder when paying for the contract. The changes proposed in the instructions of the Central Bank should lead to the fact that ILI and NSL actually “become similar to deposits,” since upon survival or death, the insured amount will increase by interest at the key rate. BCC is trying to reduce the level of additional income, explains Ms. Samsonova.
The Central Bank did not abandon its idea, but to a certain extent took into account the opinion of the market. The draft includes tables of coefficients for calculating the insured amount for survival risk and their differentiation depending on the value of the rate, as follows from the table of proposals and comments to the draft instructions. But the details have not yet been revealed.
According to the general director of Renaissance Life, Oleg Kiselev, the company will comply with the requirements of the Central Bank, “although it considers them quite strict.” In other sectors of the financial market and products, the regulator does not establish requirements for the amount of guaranteed profitability; they are determined on market conditions, he emphasized. Other insurers did not respond to Kommersant’s request.
Based on the results of three quarters of 2023, total premiums of life insurers increased year-on-year by 48%, to almost 563 billion rubles. Total payments for this period increased by 36%, to almost 340 billion rubles. Premiums for life insurance in the first nine months of 2023 increased by 60%, to 138 billion rubles, for private life insurance – by 30%, to 234 billion rubles, respectively. Payments under the ILI showed an increase of 28% (about 209 billion rubles), for the private life insurance – by 78% (105 billion rubles).
The requirement to introduce coefficients will lead to the need to change insurance products, the ARIA notes. In particular, according to Alexander Tsyganov, a professor at the Financial University under the Government of the Russian Federation, “consumer value is growing, but there is a nuance – the need to ensure a minimum return limits the choice of investment instruments.” “Guaranteeing income and understanding among potential policyholders that this is exactly what they will receive will require a revision of the methods of promoting NSL and ILI, appealing not only to profitability, but also to insurance protection,” he continues.
But the products will become more attractive to consumers, experts say. “Insurance programs will be simpler and, most likely, more understandable for mass insurers, which will increase their number in the future,” says Mr. Tsyganov. The fact that the Central Bank obliges insurers to take into account the key rate as part of the coefficients for the amount of the insured amount, adds Mikhail Kunin, head of the personal insurance department at Nobilis, suggests that the regulator is trying to maintain the attractiveness of the products for the end consumer.