Российский рынок страхования (English)

Russian Economic Academy named after G.V.ITUATION IN RUSSIA. student of 3 course IFB amp IB gr. 2307 Serge LotchanMoscow,INTRODUCTION Theterm market denotes a place where people buy and sell goods.

There is, ofcourse, no good reason why services should not also be sold in a market. Formany years Lloyd s of London was the only place where representatives of buyerscould meet sellers face to face but there are now similar markets in the UnitedStates. Mostinsurance today is arranged by intermediaries acting on behalf of clients.Their job is to arrange insurances on behalf of people who ask them to do sobut also to encourage people

to insure in respect of needs which theintermediary - being experienced in insurance and risk - makes them aware of. Thediagram shows the general structure of the insurarice market. The buyers in themarket are the public, industry and commerce as well as some local governmentand nationalised enterprises. Obviously there is a difference in the sizes ofrisks offered ranging from the contents of very small flats insured againstfire, to large office blocks in the centre ot a big town.

Thepeople who offer insurance cover are the insurers who may be proprietarycompanies, societies, mutual indemnity associations or Lloyd s Undenvriters.Insurance may be bought directly from companies at their branch offices orthrough their represeptatives. Most insurance, however, is arranged throughintermediaries who are approached by prospective insureds or bring the need forinsurance to the notice of their clients. Intermediariesare brokers and agents who act on behalf of their clients but are usually paidin the

form of commission by the insurers.PROPRIETARYINSURANCE COMPANIES Proprietarycompanies are owned by theshareholders whose liability for lossesis restricted to the nominal value of their shares basically that is theoriginally stated face value of the shares .MUTUALCOMPANIES Mutualcompanies have been formed by Deed of Settlement or registration under theCompanies

Acts. They are owned by the policyholders who share any profits made.The shareholder in the proprietary company receives his share of the profit byway of dividends, but in the mutual company the policyholder owner may enjoylower premiums or higher life assurance bonuses tha would otherwise be thecase. Itis no longer possible to tell from the name of a company whether it isproprietary or mutual. Many companies which were originally formed as mutualorganisations have now

registered as proprietary companies. Thereare other ways of classifying insurance companies. a Specialist companies- are those whichunderwrite one type of insurance business only, e.g. life companies, engineering insurancecompanies. b Composite companies- are those which underwrite several types of business.IINSURANCE HOMESERVICE INSURANCE These are proprietary companies transacting industrial life assurance and increasingly, ordinary life

assurance as well. Their activities in industriallife assurance are controlled by the Industrial Assurance amp FriendlySocieties Acts. Premiums are collected weekly, fortnightly or monthly.Collectors are employed to call at the homes of the policyholders and newbusiness is also transacted in this way. OrdinaryBranch life assurance premiums are collected quarterly, half-yearly orannually, or paid by Direct Debit monthly. If the premiums were physicallycollected more frequently than every

two months the policies would beconsidered to be Industrial Life Assurance and subject to the appropriate laws.COLLECTISocieties Acts. They transact industrial life assurance and, in somecases, personal accident and sickness cover. Friendlysocieties can issue specially attractive life assurances subject

to an overallpremium limit of quite a low level this premium limit does not apply toIndustrial Life Assurance companies.CAPTIVEINSURANCE COMPANIES Captiveinsurance is a method of transacting risk transfer which has become more commonin recent years among the large national and international industrialcompahies. The parent company forms a subcidiary company to underwrite certainof its insurable and sometimes otherwise

uninsurable risks. Indeedthe incentive to form a captive company for many large industrial concerns wasthat the insurance market generally was not prepared to write particular risksor provide full cover an example would be insurance guaranteeing a product sperformance .MUTUALIIATIONS Mutualindemnity associations differ from mutual companies in that the latter will accept business from the public at large, whereas an indemnity association originally would only

accept business from members of a particular trade. Over the years many of theassociations have had to accept business from members of the public in order tohave greater financial stability and spread of risk and have been reformed asmutual or proprietary companies.Examples of trades which had such associationsat one time were pharmacists, farmers, furntiure manufacturers and shipowners.LLOYD SUNDERWRITERS Thereare just over 26,000 members of

Lloyd s grouped into approximately 400syndicates. The trend seems to be a reducing number of richer members names grouped into larger syndicates. These syndicates can be made up of only a fewmembers or in some cases more than a thousand. Weshould note that the names , the underwriting members, are notnormally insurance professionals. They come from many walks of life includingthe professions, the world of entertainment, the aristocracy etc. Eachunderwriting member is, however, fully and personally liable for all thebusiness

written on his behalf by the underwriter of the syndicate. Inview of this unlimited liability it is essential that strict regulations applyto any person wishing to become an underwriting member. For example UK membermust nowadays provide evidence of minimum means of 250,000 pounds and alsodeposit a proportion at Lloyd s.INTERMEDIARIES Theintermediaries in the market are insurance brokers, agents, consultants and avariety

of oiher people operating with differing titles. In some respects theyall vary slightly in what they do, how they do it and in their responsibilityfor their actions.Agent. Anagent in law is one who acts for another but in insurance the term is usuallyreserved for the individual or firm whose main occupation is in another field.Broker. Abroker is an individual or firm whose full-time occupation is the placing ofinsurance with

insurers. Thereare two categories of brokers a Lloyd s brokers they are the only persons permitted to place business atLloyd s. Theya so place business in the company market b otherbrokers just termed brokers . Bothcategories are full-time professionals who must be registered in accordancewith the Insurance Brokers Registration Act 1977. Theynormally act as agents for the insured Lloyd s brokers always so , and aregenerally remunerated by a higher rate of commission than agents.

By callingthemselves brokers they are holding themselves out to be experts inthe field of insurance and have a higher duty of care to their clients thanagents.InsuranceConsultant. Another category of intermediary is the insurance consultant, who may act in a similarmanner to an insurance broker.IndustrialAssurance Agent. Theindustrial life insurance offices and friendly societies employ representatives to call at

the homes of their policyholders tocollect the weekly premiums and hopefully to sell further policies. Theyare not intermediaries in the same way as the others. In this case the representative is employed by the insurance company but nevertheless he or she performs thefunctions of an intermediary.SELF-INSURANCE Asan alternative to purchasing insurarice in the market, or as an adjunct to itwhere the first layer or proportion of a claim is not insured in the commercialmarket,

some public bodies and large industrial concerns set aside funds tomeet insurable losses. As the risk is retained within the organisation, thereis no market transaction of buying and selling. Theseorganisations have made decisions to self-insure because they feel they arelarge enough financially to carry such losses, and because the cost to them, byway of transfers to the fund, is lower than commercial premium levels as theyare saving the insurer s administration costs and profit.

REINSURANCE Havingdecided on the maximum that it is prepared to lose in the event of a major loss,an insurer is faced with a number of choices. He may refuse the risk, agree toaccept a part of it coinsurance or accept it with the intentionof reinsuring. What is important to know here is that an insurer is faced withthe same pioblem as the insured - to share his risk so as not to suffer a lossthat would be catastrophic. In the case of co-insurance, insurers share therisk in the same way as

Lloyd s underwriters share risks . Co-insurance differs from re-insurance inasmuchas the insured has a relationship with every insurer whose name appears on thepolicy document. In re-insurance the insurer is himself fully liable to theinsured because he the insurer has made arrangements for reinsurance and thefailure of the reinsurer cannot therefore affect the insured.