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Reports: Russia's Rosgosstrakh joins initiative on sale of compulsory motor 3rd-party liability insurance in loss-making regions

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Reports: Russia's Rosgosstrakh joins initiative on sale of compulsory motor 3rd-party liability insurance in loss-making regions

, the leadingprovider of compulsory motor third-party liability insurance in Russia, decidedto join the Russian Association of Motor Insurers' agreement regulating thesale of compulsory motor insurance in six Russian regions, where access tothese products is hampered due to losses they generate for insurers, Vedomosti and Kommersant reported July 25 and 26, respectively.

Underthe agreement, set to ensure a more just distribution of risks in the problematicregions, insurers will sell not only their own compulsory motor insuranceproducts but also those offered by other insurance providers. Insurancecompanies will also be required to increase sales in the problem regionsproportionally to their market share in the compulsory motor insurance segmentat the state level, but not more than to 20%, a step proposed to relievepressure on Rosgosstrakh. With a more than 25% market share in the compulsorymotor insurance sector, the company until recently was against the agreement,arguing that it did not want to further increase its market share inloss-making regions.

Thedeadline to join the compulsory motor insurance sale agreement elapsed July 25,with insurers not joining the system facing exclusion from the RussianAssociation of Motor Insurers, which means an automatic cancellation of alicense to provide this type of insurance.

Kommersant noted that eight insurancecompanies decided not to participate in the initiative. These include VTBStrakhovanie and CJSC UralsibInsurance Group, which said that compulsory motor insurance is nota key segment for their businesses. Allianz Group unit AOSK Allianz also said that it will renounce its license to providethis particular type of insurance service and transfer its compulsory motorinsurance portfolio to insurer Medexpress, also part of Allianz Group inRussia, Interfax reported July 21.