Association representatives emphasized that the concept proposed by the government contradicts the goals for the development of the insurance sector. They believe that the project creates excessive administrative centralization, concentrating functions in the hands of a single state entity.
The IBC also expressed concerns that the implementation of this project would lead to reduced competition and increased dependence of the industry on the decisions of a single player, which could drive private insurance companies out of the market.
Furthermore, meeting participants noted that the potential consequences of the reform could negatively impact key sectors of the economy, such as energy, transport, mining, and infrastructure. They stressed that a stable reinsurance system is critically important for the functioning of these areas.
"Disruption of insurance and reinsurance protection in these sectors could lead to project freezes, worsened access to financing, and increased systemic risks for the economy," the experts added.
A potential conflict of interest was also discussed: the project allows for the combination of functions of a direct insurer and a national reinsurer, which could give the state entity access to confidential commercial information of competitors.
As a result of the discussion, the IBC proposed to suspend the public discussion of the draft resolution in order to conduct a complete overhaul of it. The business community plans to initiate changes to the presidential decree of March 20, 2024, with the aim of creating a more balanced market model rather than an administrative monopoly.
It should be noted that the government has put forward for discussion a draft concerning the creation of a national reinsurance operator. The State Insurance Organization (GSO) is being considered as such an operator. This document was developed in accordance with the presidential decree of March 20, 2024, No. 79, on the development of the insurance market.
According to this draft, insurance companies will be required to transfer part of their risks for reinsurance to the GSO, starting from 10 percent, with a possible increase to 50 percent. The justification for the initiative states that in 2024, about 85 percent of risks were reinsured abroad. Authorities believe that centralizing operations will help reduce the outflow of insurance premiums and strengthen the national insurance market.
Reinsurance is a risk distribution mechanism in which insurance companies transfer part of their responsibility to other insurers, including foreign ones. This allows for effective management of large and complex risks associated with sectors such as energy, transport, mining, and infrastructure.
