The Central Bank proposed to tighten the requirements for the capital of large OSAGO insurers

Bank of Russia offers introduce a progressive scale of capital requirements for insurance companies whose share in the MTPL segment exceeds 15%. The regulator intends to discuss the measure with market participants in the near future.

“If the level of early termination of contracts deviates or the volume of coverage changes from the forecast, real profits may be lower and losses higher, which must be balanced by capital requirements,” — indicates regulator in an explanatory presentation to the initiative.

The Central Bank believes that the new criteria will contribute to “improving market stability, developing competition in this area, as well as protecting the interests of consumers.” Now, when calculating the required capital for all players, the regulator uses a single coefficient. The authors of the initiative especially emphasized that the measure is preventive and now insurers do not need additional capitalization.

By the end of 2022, OSAGO payments increased by about a third, the Russian Union of Motor Insurers reported. In December 2022, the average amount of compensation exceeded 90 thousand rubles. Already at the end of January, market participants proposed to enshrine in the law on OSAGO “the uncontested right of the insurer to organize and pay for the repair” of a car.

Read more about this in the material “Old parts appear in OSAGO”.