On 30 September 2012, a new procedure will come into force for insurers to investing insurance reserves, as adopted per an order of the Ministry of Finance of the Russian Federation. Specifically, the following changes have been made:

  • the promissory notes of organisations have been excluded from the list of assets accepted to cover (guarantee) insurance reserves, with the exception of promissory notes that are actually honoured as per sale and purchase agreements; 
  • the investment possibilities of insurers have been diversified by increasing:
  1. the share of the insurance reserves that may be invested in non-government securities, including those issued by international financial organisations or by non-residents of the Russian Federation included in the Lombard list of the Central Bank of the Russian Federation; and
  2. the share of the cumulative amount of the reserves transferred to a trust management from 20% to 50%;
  • the cumulative amount of the share of non-resident reinsurers has increased from 30% to 40% for non-life insurance; the share of one non-resident reinsurer may not exceed 35%; 
  • a limit has been set on the share of a non-resident reinsurer in insurance reserves if the reinsurer’s country of incorporation is not a member of one of the following international organisations: the EuroAsian Economic Community, the Organisation for Economic Co-operation and Development, the Commonwealth of Independent States, the Shanghai Co-operation Organisation, MONEYVAL, or the Financial Action Task Force on Money Laundering; and 
  • the accounts receivable of insured parties are to be accepted up to 100% of the amount of an unearned premium reserve as per the agreements of obligatory state insurance, state and municipal buyers, as well as buyers who have entered into insurance agreements in line with the Federal Law “On the Purchasing of Goods, Works and Services by Separate Types of Legal Entities”.

If an insurer does not adhere to these requirements, it risks receiving an improvement notice from the insurance regulator. Non-compliance with the notice could result in the insurer’s licence being suspended or restricted.

[Order No. 100n of the Ministry of Finance of the Russian Federation “On Adopting the Procedure for Insurers to Invest Insurance Reserves”, dated 2 July 2012]