From 1 September, FFMS will integrate with the CB, taking most of the staff and the action plan with them, two FFMS sources told Vedomosti. FFMS Press Office confirms that the action plan is in place.

In late 2011, FFMS formed a list of pillar insurers subject to closer inspection, says a FFMS representative. Companies were picked according to premiums accrued, network development and presence in socially important markets, such as third-party liability car insurance. Other criteria may be added later, including total assets and membership in insurance groups and communities. Both federal and regional companies are eligible for the list, and the Service will pay special attention to monitoring their financial stability and solvency, concluded the source.

“The regulator already collects information on 20 insurance companies’ assets and actively monitors their business”, wonders Ingosstrakh CEO Alexander Grigoriev. He thinks that the selection criteria will be similar to banking.

Deputy Finance Minister Alexey Moiseev agrees: selection will be based on the prominent role of companies in the nation’s economy.

“On the federal level we are talking top 10 largest companies by asset value, accounting for more than half of the market (57,1%)”, says National Rating Agency’s Tatiana Nikitina. “These insurers are federal and regional companies with up to 30% in socially important markets, such as mandatory health insurance, third-party liability car insurance or hazardous production facilities insurance”.

Listed companies could be leading reinsurance companies, assuming liability for third parties, or those who carry special liability as part of a pool, muses Deputy CEO at Expert RA Pavel Samiev.

Companies are likely to be subject to more detailed reporting and tougher asset structure, risk management and transparency requirements, says Nikitina. She does not rule out the possibility of introducing curators on the insurance market, similar to banking.

Curators will actually be unleashed on core market players from Q1 2015, as stated in the action plan. According to the document, this will require more manpower and financing for the oversight department.

“We are not talking a separate insurance market control division, however this function could be introduced for insurers by the Central Bank in due time”, expects a FFMS staffer.

Pillar insurance market players need privileges to ensure more support from the regulator in case of emergency, but on the other hand, this calls for tougher oversight, affirms Samiev: “For the regulator to get a clear picture of major companies’ stress resistance, curators could be pooled with oversight (common CB practice) combined with harsh requirements to assets and liabilities plus regular stress-tests”.

“The market is underdeveloped, there are no pillar companies there yet”, says the President’s Financial Market Development Council Member Alexey Savatyugin. “This logic works for banks, whereas if an insurance company collapses, it will naturally affect its clients, not the market”. If the Insurers Union Payment Funds collapses, it is a worse incident, but still not a system crisis, links between companies should also be taken into account, he says: “It will end up with putting a lid on the takings – the easiest solution for bureaucrats”.

Financial markets megaregulator, Project Group №1