The concept of insurance activity, state regulation and role in the Russian Federation

Insurance today is considered one of the most promising and fastest growing areas of Russian business. The generally accepted classification includes three main types of insurance: personal, property and liability. Auto insurance should be highlighted in a special category, which attracts more and more entrepreneurs every year. The interest shown by enterprising people in this type of activity is understandable - the number of cars is steadily growing, and at the same time the share of vehicles purchased on the primary market is growing.

Most people who buy a new car prefer to protect themselves from the risk of damage or theft of property by concluding a CASCO agreement. In addition, motor third party liability insurance (MTPL), recognized as mandatory in our country since 2003, does not lose its relevance today. Learning how to open an auto insurance office and what types of work patterns exist in this industry will help you establish your own business with good prospects.

Auto insurance as a business

In a broad sense, insurance is a special type of relationship between two entities, one of which, the policyholder, is interested in protecting himself, his property and his liability from the occurrence of all kinds of adverse events. For this purpose, he enters into an agreement with the insurer, which necessarily specifies the object of insurance, the amount of the insurance premium, as well as the amount and procedure for making payments.

The insurer, in turn, having a certain capital, assumes obligations to compensate for damage to the policyholder upon the occurrence of an insured event within the framework established by the contract and current legislation. The goal of any insurer, as an entrepreneur, is to make a profit, and the effectiveness of such a business directly depends on the number of transactions concluded. You can ensure the financial stability of your enterprise only by creating a sufficient insurance fund.

Important! You must understand that insurance in general, and car insurance in particular, is a rather risky activity, since the occurrence of an insured event, and therefore the need to make payments several times higher than insurance premiums, does not depend in any way on the entrepreneur providing such services.

As for the objects of activity, auto insurance as a business provides for 2 fundamentally different areas:

• CASCO property insurance is voluntary, the object is the car itself, it is insured against possible damage, as well as theft
• Compulsory MTPL liability insurance - the object is recognized as the property interests of the car owner, which are associated with obligations arising as a result of harm to the health and life of third parties, as well as their property (in other words, in the event of an accident that occurred through the fault of the insurer, possible damage to the participants in such an accident is compensated insurance company within the framework specified in the contract)

As domestic practice shows, it is inappropriate to work in only one direction. The fact is that compulsory motor liability insurance is strictly regulated by government authorities; tariffs for this type of insurance are set exclusively by the Government of the Russian Federation. The insurance entrepreneur cannot influence the final cost of the policy. According to experts, a business designed only for the sale of MTPL insurance is obviously unprofitable.

In turn, CASCO opens up good opportunities for the insurer to earn money, as it involves independent management of tariffs and adjustment factors. However, due to its high cost, and also because it is not mandatory, CASCO is in much less demand among car owners. The optimal solution for a car insurance business is to combine both directions, as well as provide additional paid services, for example:

• Assessment and examination
• Help in case of an accident
• Life insurance
• Providing technical assistance in case of an accident

All these items can be included in the cost of insurance. Having gained a general understanding of auto insurance, let’s look at issues related to organizing a business.

What is personal insurance

Personal insurance is carried out in order to protect the material interests of a citizen associated with harm to his health, including the likelihood of death. The decision is made by a person voluntarily, based on an assessment of the risks possible at the present time, in the near and distant future.

Note! The policy does not affect production or other activities, since these industries have their own types of insurance services.

What does it include

Personal insurance covers a fairly wide range of potential risks.

The main areas of insurance in this service sector are as follows:

1. Life. People understand that they are mortal, and sometimes suddenly. Death is determined by both old age and youth. The contract specifies the beneficiary, who can be an individual or a legal entity.
2. Health. The main purpose of the policy is to pay medical expenses when a disease occurs. The agreement may stipulate the costs of staying in the clinic, medications, equipment, doctor’s services, and transportation.
3. Accident. Risks extend both to your own negligence and to harm to health from third parties, animals, and natural phenomena.
4. Pension. A citizen transfers money to private or public funds in order to receive payments upon reaching a certain age.
5. Cumulative. Deductions are made until the client dies or reaches the age specified in the agreement.
6. Tourist. In this area there is the widest range of different types of insurance services and conditions. A citizen can include in the policy not only standard dangers, but also the costs of search and rescue operations, evacuation, transportation home, medical expenses abroad, and cancellation of travel.

Related article: Ways to check an insurance company for a license

Note! Some companies are willing to provide extended agreements that cover all risks. In such cases, each of them is cheaper.

Option 1. Creation of an insurance company

This option is the most expensive and time-consuming. When opening an insurance organization, you must be guided by the requirements of Russian legislation, namely:

• Chapter 48 of the Civil Code of the Russian Federation
• Law “On the organization of insurance business in the Russian Federation”
• Federal Law No. 40-FZ “On compulsory insurance of civil liability of vehicle owners”

According to the above regulatory documents, the insurance company must have the status of a legal entity, that is, in order to obtain a work permit, state registration of the legal entity is required. persons in the tax service. In addition, such a company will need a license to carry out insurance activities.

Since 2020, the licensing authority is the Insurance Market Department of the Central Bank of the Russian Federation. To obtain a license, it is necessary to provide the licensing authority with documents indicating that the organization has an insurance reserve sufficient to conduct its activities. The main requirement is the presence of a fully paid authorized capital in the amount of at least 120 million rubles.

Important! It is not allowed to contribute borrowed funds and pledged property to the authorized capital.

The requirements for a licensee in the case of auto insurance also include:

• Minimum experience in the field of CASCO and OSAGO insurance – 2 years
• Availability of an authorized representative in each of the constituent entities of the Russian Federation
• Access to the automated compulsory insurance system
• Membership in a professional association, which is the Russian Union of Auto Insurers (RUA), etc.

The law also establishes requirements for the insurance portfolio of such organizations. The amount of insurance premiums (contributions) that fall on MTPL and CASCO insurance in the total volume should not exceed 50%. That is, a company cannot only engage in vehicle and civil liability insurance; the scope of its services must be much broader to ensure financial stability.

It follows from everything that in order to open your own insurance company, you need to have large start-up capital and significant experience in the insurance industry. But along with this option, there are other, more affordable ways to make money on car insurance.

conclusions

Insurance activity in the Russian Federation is a regulated area of ​​financial relations. Features of the insurance business:

• Compliance with the principles and mechanisms is controlled by the regulator represented by the Bank of Russia.
• The Central Bank issues and revokes licenses, monitors compliance with legislation, considers financial issues regarding the authorized capital of the insurer and appoints a temporary administration.
• In the Russian Federation, there are officially 2 forms of insurance: voluntary and compulsory.
• Insurance activities are classified according to a number of criteria and divided into categories depending on the type of services.

If you want to know more about the topic, you can consult an online lawyer on our portal. Communication with a specialist is free. If you liked the article, support it with a like and repost!

Read more about the essence of insurance in Russia in a separate post.

Option 2. Working as an agency

This is a simplified option for carrying out insurance activities and, in fact, it represents an intermediary scheme. That is, you do not need to create a legal entity and obtain the appropriate license. You can work as an individual entrepreneur and represent the interests of several existing insurance companies at once. How to open a car insurance office? To do this you need to follow a few relatively simple steps:

• Register an individual entrepreneur
• Select the companies with which you will cooperate and make a request to conclude an agency agreement
• Pass interviews and prove your usefulness to representatives of insurance organizations, conclude contracts and, if necessary, undergo training (requirements for agents may vary)
• Rent and equip office space with Internet access
• Organize advertising of your services

The profit of such a business will consist of an agency fee, provided as a percentage or a certain amount from each issued policy. Your effectiveness will depend entirely on your communication skills, activity and professionalism. More clients - more insurance issued - more profit.

The amount of monetary remuneration for agents is not usually disclosed openly; it can be clarified with representatives of a particular insurance company in person. If you believe the reviews of already operating agencies, earnings range from 10 to 30% of the cost of the policy.

The advantages of this format of work compared to opening your own insurance company include the fact that the entrepreneur risks virtually nothing. If an insured event occurs, cash payments are made by the insurer whose product was sold to the client.

Important! The insurance agent is responsible for maintaining the insurer's trade secret data, non-disclosure of personal data of clients (policyholders), as well as for the safety of funds received from policyholders and the proper use of insurance policy forms.

Opening an insurance agency according to the specified scheme is the most common option for a car insurance business, which does not require significant financial investments at the start, and at the same time, allows you to earn good money. More details about the principles of operation of the insurance agency are described in the following video:

Option 3. Brokerage activities

Another option to build your own auto insurance business is to become a broker. A broker is a classic intermediary. His difference from an agent is that he cannot represent one of the parties to the insurance contract. He has the right to act in the interests of one party or another as an independent insurance subject.

Thus, when carrying out brokerage activities, an entrepreneur on contractual terms can receive monetary compensation either from the insurer or from the policyholder (only from one party) for performing certain functions. Most often, it is policyholders who resort to the services of brokers, the most popular of which are:

• Consulting in choosing an insurance company
• Help in drawing up an agreement
• Selection of the optimal insurance product
• Support and amendments to the contract, etc.

The services of such intermediary enterprises are usually paid in the form of a set fee. The activities of brokers are subject to mandatory licensing. According to the law, in order to become an insurance broker, you need to undergo state registration of business activity, but you can decide for yourself what is better to open - an individual entrepreneur or an LLC. In addition, an individual entrepreneur (or the head of a legal entity) must have at least two years of work experience in the insurance industry.

Principles of liability insurance

Among the various types of insurance in the Russian Federation, there is such a direction as personal liability. This service covers areas of activity where an error made during the performance of official duties can cause harm to the property and health of third parties. These types of production include transport, medicine, livestock farming, and some branches of heavy and light industry.

Related article: Who are the policyholder and the insurer in the insurance business?

Note! Liability insurance is a mandatory type of protection for health and property. There is a cadastre of professions that pose a danger to others.

What is included in liability insurance

The program covers the following objects and areas:

• drivers;
• carriers;
• installation and production risks;
• medical workers;
• manufacturers of goods (the possibility of products causing harm to consumers);
• legal activity in terms of lack of the desired result;
• enterprises that are potentially dangerous to people, nature and infrastructure;
• all professions where the carrying and use of weapons is expected.

Important! Compensation is subject to both material damage and expenses for treatment (funeral) of the injured persons. Damage caused intentionally or that could have been prevented if the preconditions for the event were known and eliminated are not subject to compensation.

Advice for Beginners

Before you open an auto insurance business, it is advisable to gain initial experience in this field of activity. Alternatively, you can work for some time as a full-time employee in one of the insurance companies to learn the principles of work, study the insurance market, etc.

The specifics of auto insurance as a business oblige the entrepreneur to be aware of all the latest changes in legislation, as well as monitor statistics on the occurrence of insured events. A competent professional approach will allow you to instill trust among policyholders, form a permanent client base, and therefore ensure a stable income. Read also detailed information on how to start your own business from scratch.

Victor Shemyakin Author #ВЗО. A young entrepreneur, he managed to open several projects of varying degrees of success. He shares his experience and opinions with our website. He will talk about what a novice businessman should know and do to make it easier to run his business and avoid possible problems.

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