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Russia develops scheme for compensating clients of failed life insurers

The Central Bank of the Russian Federation plans to launch a guarantee scheme for the life insurance market, which will operate in a similar way to the existing bank deposit guarantee system.

Under the scheme, if an insurance company goes bankrupt, its financial obligations to a client under a life insurance contract will be covered for up to 1.4 million Russian rubles from a special fund which will be formed using mandatory contributions by life insurers.

Investment income received under a life insurance contract will not be part of the coverage, the central bank said in its Oct. 22 filing.

The system will be overseen by Russia's Deposit Insurance Agency. The central bank plans to put the proposed scheme up for discussions with local experts and market participants. The scheme is not expected to launch before 2021.

As of Oct. 22, US$1 was equivalent to 63.61 Russian rubles.