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Russia to step up scrutiny of investment life insurance products

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Russia to step up scrutiny of investment life insurance products

Central Bank of the Russian Federation wants to strengthen the supervision of investment life insurance products, arguing that banks have been too aggressive when selling these and other complex financial products, Kommersant reported March 13.

The regulator met with representatives of banks and insurance companies and is looking to set up a working group to find ways to improve investor protection.

Investment life insurance products constitute between 70% and 75% of all products sold in the life segment in Russia, and nearly all of these products are sold via banks, the newspaper said.

Banks in Russia have been promoting life insurance products as an alternative to deposits, which the central bank believes is perilous not only because such products are not covered in the state protection scheme, but also because their yields are not guaranteed and clients are penalized if they cash policies in before their completion date.

The All-Russian Insurance Association argues that banks should be held responsible for the unscrupulous sale of such products. The association has said its members might stop cooperating with banks if the responsibility for dishonest selling practices is not shared.