Measures for support of insurance companies under the crisis conditions: first of all control, then financing

Quantity instead of quality: the margin of solvency of Russian insurers grows up, reliability - goes down. Dynamics of the margin of solvency of insurance companies are affected by two tendencies at the same time: the normative amount of the insolvency margin is decreasing due to reduction of insurance premium, and the actual one - due to impairment of assets. As a result of these two parallel processes, for the first time over several years the average value of actual and normative margin of insolvency of Russian insurers grew up: increase amounted in average to 16.5% over the first half of 2009. Thus, formally, the need for increase of capitalization of the domestic insurance market reduced. However, during the crisis the quality of assets of insurance companies reduced sharply. In addition, the risks of financial stability of insurers themselves grew up.

According to forecasts of the rating agency Expert RA, in the medium-term perspective (2-3 years) two scenarios of development are possible: either the crisis will enter the lengthy stage when as a result of losses the value of actual solvency margin of insurance companies will reduce, or growth of economy will begin, in such case, the value of the normative margin of solvency will increase. In any case Russian insurers will need additional capital.

Price of deferral: visible crisis resistance of the insurance industry did not allow for adoption of necessary measures of support. Unlike banks which may at any time suffer from "depositors' panic", the liquidity crisis may be faced by insurance companies only as a result of conscious actions on the part of their management or owners. Just for this reason, insurance companies do not mostly need measures for support of liquidity (which are so necessary for the banks during the period of an acute phase of the crisis). However, insurance companies anyhow need support: during the crisis the main preconditions on which the business of insurers was built, change.

Bankruptcy of insurance companies occur with a certain lag in relation to the period of the active phase of the crisis. According to forecasts of Expert RA, problems of insurance companies will manifest themselves in form of loud bankruptcies already in the middle of 2010. If literary measures for support of the insurance industry would have been taken at the end of 2008, these bankruptcies could be avoided.

Quality instead of quantity: development of the insurance industry will be facilitated by improvement of its reliability (adequate formation of reserves and security thereof with high-quality assets) than by increase of the nominal capitalization of insurers. Subordinated credits will not be able to correct the established situation since in 90% of cases they will be ultimately secured by the same notes from other entities instead of real money.

Here, in the opinion of Expert RA, in addition to subordinated credits, more fin measures are required, namely:

• introduction of the institute of a responsible actuary at simultaneous change of the rules for calculation of insurance reserves (control of insurance risks);
• check of quality of assets as of non-accounting dates at a certain mitigation of requirements to the composition and structure of assets taken as coverage of insurance reserves and own funds (control of credit and market risks).

These measures shall be aimed at mitigation of probability of appearance of financial pyramids in the Russian insurance market.

Simultaneously with (but not instead) of increase of reliability of the Russian insurance market the state shall take a number of measures aimed at development of demand for insurance.

Assistance in the project: none of the anti-crisis measures discussed from the beginning of the crisis in the area of insurance as of March 2010 has not been implemented. These measures include: the draft law on bankruptcy of financial organizations, amendments concerning creation of the institute of independent insurance actuaries, introduction of internal control at insurance organizations, authorization of subordinated credits etc. As a result, companies, without facing any restrictions on the part of the regulator undermine their reliability even more, exercising damping and "designing reports". The crisis in the insurance market is getting stronger.