Our progress / Hot Topics

Financial markets megaregulator

Back to Media

Central Bank Insurance Monitors to Keep Files on Companies

28.11.2014 18:25 / Interfax

The Bank of Russia has drafted a regulation on Insurance Monitors, a market source told Interfax. “The draft is currently under insurance market review (until 5 December)”, he said.

The source stated that all insurers are split into 3 groups. “The regulator assigned top 20 highest-grossing companies to Group 1, #21 to #100 were assigned to Group 2. The remaining insurers are assigned to Group 3. Every company in Group 1 will be curated by one Monitor, and in Group 2 one Monitor will handle a number of companies at once", he said. The source said the breakdown was earlier announced by the Central Bank at meetings with insurers.

The source sees the streamlined oversight and Monitors will usher in a new era for insurance companies.

According to the Central Bank draft, the purpose of Monitors is to perform Central Bank control and oversight functions. Monitors are to provide timely, full and accurate estimates of the insurance company’s financial standing, said the source.

The Central Bank draft states that a Monitor must graduate a higher school in economy, law or mathematics, and a minimum of 3 years’ career in insurance oversight.

Also, a Monitor must be independent: no work relations with monitored company for 3 years prior to appointment, no Board of Directors or Supervisory Board membership, ownership or co-ownership.

Moreover, Monitors are not to be related to shareholders. Spouses, parents, children (including adopted), grandchildren, brothers, sisters, grandparents must not own over 1% of the monitored insurance company.

The CB Monitor must also be unrelated to the CEO, Deputy CEO, Board members, CFO and Deputy CFO of the insurance company.

“The Monitor’s relationship with the monitored company will be outlined in a separate Central Bank regulation”, pointed out the source.

He says the CB concept is to set a 3-year limit on monitoring one company. “Extending the period is possible for one year only”.

Draft Regulation on Insurance Monitors provides Monitors with access to the Central Bank Insurance Market Department information.

Monitors also have a voice in discussions and decisions pertaining to the insurance company. If necessary, the Head of Insurance Market Department may assign the Monitor to the audit group. The Monitor keeps an oversight dossier on the company.

The files will reflect ownership, reporting, audit and actuary records, corporate governance info, internal documents (rules, regulations, procedures), statements and analytics, company development outlook, oversight measures taken.

The Monitor may add press clippings, rating agency data and other outside information.

The files are available to other Central Bank staff by permission from the Head of Insurance Market Department.

The Monitor reports quarterly to his manager with a brief analysis of the company’s financial standing, and submits a full analysis every 6 months.

The Monitor may propose audits, attend the insurer’s meetings, discuss with the company executives its financial standing, trends, development outlook and non-compliance issues.

The appointed Monitor may request various business information from the insurance company.

The authors of the draft plan to enact the regulation 10 days following its publication in the Bank of Russia Newsletter.

Financial markets megaregulatorProject Group №1