"We need to let go of the price of MTPL insurance completely."
The head of the All-Russian Union of Insurers, Evgeny Ufimtsev, said in an interview with Izvestia. According to him, the market is ripe for this, so the Union will come out with such a proposal to the Central Bank in early 2025. The current tariff corridor is not enough for emergency drivers. And if it is not changed, the average price of the policy next year will rise by about 9%, which is how much the price of spare parts rose in 2024. Because of payment problems, about 40% of containers with parts are now hung up, and this affects the cost, Ufimtsev explained. According to him, next year they may also increase the repair period under MTPL insurance to 45 days. Whether it will be allowed to fix the car under the compulsory policy used parts and when drivers without MTPL insurance will start to be fined by cameras - in an interview with the head of the VSS "Izvestia".
"Peoplebegan to insure more often against drivers without a MTPL policy"
- What main trends in the development of the insurance market can you emphasize at the end of this year?
- One of the important phenomena for the insurance market in 2024 is the outstripping growth of insurance collections compared to inflation and GDP. This means that the sector continues to develop steadily despite some instability in the economy.
The drivers this year were primarily personal insurance, such as life insurance. VHI also grew strongly - companies started to buy medical policies for their employees more often.
This year there will be record payments in agro-insurance. In addition, the policies worked effectively in the regions that suffered during the spring floods.
Another important trend this year is the emergence of short CMTPL policies. This is not a replacement for traditional annual policies, but a kind of point expansion. For example, if a person decides to work in a cab on the weekend, he can buy an additional MTPL insurance policy for cabs for these two days and not overpay.
- Have any new products or new segments started to appear this year?
- A lot of mini-covers have appeared this year. For example, people began to insure more often against drivers without a MTPL policy or buy protection in case of an accident when the limit of 400 thousand is not enough to cover the damage. If the perpetrator of the accident has such a policy, the insurance company will compensate the missing amount instead.
And this trend was not only in the car segment - in 2024, there was a surge in various boxed products, and often cheap - at a price of about 2 thousand rubles. At the request of the Central Bank, we are now preparing insurance standards. This will make various policies more understandable for consumers. The standards for insurance policies will specify the minimum coverage requirements and describe the products themselves.
- Do you expect the volume of the insurance market to grow at the end of this year compared to the previous year? Approximately how much can it amount to?
- Yes, we expect that the total volume of insurance market collections in 2024 may reach a record RUB 3.4 trillion. This is 45% higher than the previous year.
"In 2025, the repair period for CMTPL insurance may already be increased to 45 days"
- Recently, the Russian State Duma passed in the first reading amendments to increase the repair period for MTPL insurance from 30 to 45 days. Do you know how the discussion of this initiative is progressing now?
- The proposal to increase the period of repair under CMTPL insurance is correct, because the increased delivery time of spare parts makes it extremely difficult for insurers to repair a car in 30 days. Now only parts are delivered on average from three weeks to several months. Therefore, not every car can be repaired even in 45 days. We proposed to separate the period of spare parts delivery from the repair period, but we came to this compromise.
I think that at the beginning of next year the second reading of the relevant bill will take place, and in 2025 the repair period under CMTPL insurance may already be increased to 45 days. We expect that its adoption will partially solve the problem and the number of repairs under CMTPL insurance will increase.
- If this norm is adopted, how much can it increase the share of compensation under CMTPL insurance from the current 5%?
- Increasing the time limit under MTPL to 45 days would help about twice as many cars to be repaired. But it is important to note that this change alone will not cure the market. Along with this novelty, we need to introduce a number of other changes. We want to carry out a serious reform of natural compensation under CMTPL insurance. Consumers traditionally prefer to pay for a repaired car, also because in this case the depreciation on replaced parts is not deducted. If a set of measures is adopted, the repair rate could double.
Many clients specifically ask to have their car repaired by insurance rather than compensate for the accident with money. And when it comes to the inability of the company to carry out repairs due to the peculiarities of the law, it becomes clear that the situation needs to change.
We also want a person to be able to choose a service station independently, even if the insurer does not have a contract with it. In this case, part of the responsibilities will fall on the consumer, but these changes need to be more clearly described, and we are preparing such proposals. The main goal of our proposals is to increase the share of repairs under CMTPL insurance.
- The Central Bank reported that they generally support this initiative, but how do the Ministry of Finance feel about it?
- The Central Bank and the Ministry of Finance stand for the protection of consumer rights, they are afraid that the entire responsibility as a result will not fall on the individual. In this case, the client will be the weak party. We cannot allow stations, for example, to carry out poor-quality repairs or deceive customers at all. The goal is not just to prepare such amendments, but to make the system work.
We also cannot oblige a person to go to the station immediately after receiving a referral for repair. We need to clearly describe the processes involved in its approval and carrying out. We are now working on this with the Central Bank and the Ministry of Finance. I think that early next year we will prepare proposals to change the law on compulsory motor TPL insurance and we will be able to start the process of amending the legislation. Then in 2025, Russians may already be allowed to choose their own station for repairs under CMTPL insurance.
"Because of payment problems, about 40% of containers with spare parts are now stuck"
- What is the maximum timeframe for parts delivery?
- Sometimes the delivery time of spare parts can reach three months. But mostly it concerns electronics. Sometimes only payment takes a month - the transaction is checked and confirmed, then it takes another two to three weeks for transportation. Before importation into third countries, there is an additional check to see if the goods are on the sanctions list. And now almost all headlights are smart - they have some kind of microchips in them. Because of this, another check is required to see whether the sanctions regime is being violated.
That is why parts suppliers have begun to use a new method of delivery - to split the cargo into different containers for different types of parts. For example, one container contains all rubber parts, another contains iron parts, and a third contains glass parts. This helps speed up the delivery of at least some parts. But the amendments to the law on MTPL insurance will improve the situation with car repairs.
- Earlier you said that about 30-40% of containers with spare parts began to hang up before shipment because of problems with payments. How has the situation changed now?
- The supply situation is still difficult, and this is a problem for the market. Sometimes there are situations when four out of five necessary parts have already been delivered, but the repair cannot start precisely because the last one is missing.
About 40% of containers with spare parts are still stuck due to payment problems. However, the situation is dynamic, it is constantly changing - in one place the problem is solved, but in another place it appears. At the same time, difficulties arise with payments when supplying spare parts from China, Turkey, UAE and even Kazakhstan. Sometimes they appear even with payment not for cargo, but for transportation. All this can lead to additional delays. However, government agencies and the Central Bank are promptly responding to the situation and new challenges.
Russia has chosen an extremely correct vector of development - that the delivery system should not be centralized, but that many suppliers should work together. They bring in parts from different factories, through different channels. This allows the system to better adapt to changes.
"Next year, the price of MTPL insurance will increase by 9%."
- You said that if delays in the supply of spare parts do affect the price in the new guides, insurers may adjust the tariffs for CMTPL insurance. According to your data, are they reflected in the guides? Should we expect an increase in tariffs because of this?
- Yes, it has been reflected in the spare parts directories. The average payout on MTPL insurance continues to grow, it has exceeded 100 thousand rubles. At the same time, the average price of the policy has not increased this year. However, we see that spare parts for foreign cars went up in price by about 10-12% in December.
In general, the cost of parts for 2024 has increased by 9% on average. And this with a certain lag will also affect the cost of the policy. That is, next year the price of CMTPL insurance will increase by 9% - approximately by the same amount. Or we need to expand the boundaries of the tariff corridor for CMTPL insurance, so that insurers can increase the cost only for emergency drivers.
By the end of the year, we have reached the maximum use of the current CMTPL insurance corridor. The current thresholds are no longer sufficient for emergency drivers. We want to continue the reform of individualization of tariffs, otherwise the price will rise not only for risky car owners, but also for everyone else.
"RAMI will propose to the Central Bank to introduce a free tariff for CMTPL insurance"
- How much do you think the tariff corridor should be increased?
- I believe that for six years now the market has been undergoing a maturity test to see whether the corridor boundaries work. It seems to me that we should completely let the price of MTPL insurance go, setting only a limit for the maximum cost of the policy. The market has matured and the state authorities can control it sufficiently. Therefore, there should not be any abuses. In addition, there is a reinsurance pool where insurers can transfer contracts for which there is not enough tariff (in this case, the costs are divided among all market participants in proportion to their share).
- The Central Bank just in the summer said that they are ready to consider in the medium term the possibility of introducing a free tariff. Are you going to come out with such a proposal?
- Yes, RAMI (the Russian Union of Motor Insurers - Evgeny Ufimtsev is also its head) will propose to the Central Bank to introduce a free tariff for CMTPL insurance. We will discuss this possibility with the regulator at the beginning of next year. I think this measure will be linked to the reform of in-kind compensation.
- How could this affect the price of CMTPL insurance?
- For emergency drivers the price of insurance will continue to rise, while for 85% of car owners the price of MTPL insurance will not change. For them, there will even be an additional discount due to a good KBM (accident rate. - Ed.).
"Fines for the absence of MTPL insurance on cameras will begin, perhaps, as early as 2025".
- The possibility of allowing the use of second-hand spare parts for repairs under CMTPL insurance has been discussed more and more actively this year. The Institute of Motor Transport has already conducted a study, agreed with the Ministry of Transport, on which parts are safe to reuse. How are the discussions with the agencies progressing?
- This is the right track, it is useful for the entire Russian car industry. We see understanding on the part of government agencies, they are also interested in the development of the automotive industry. We are now in a dialog. We have not received a categorical rejection of this idea, but we are receiving questions that need to be worked out so that the use of second-hand spare parts in repairs under CMTPL insurance does not reduce safety on the roads and does not worsen the situation with cars being stolen for parts. We are now preparing regulatory documents with clarifications.
It should be understood that at some point the Russian market was sharply reoriented towards the use of only new parts in repairs, but parts have been reused before, and this is now actively used in international practice.
- Do you think that this issue will be solved next year?
- Yes, we would very much like to solve it in 2025 and decide on the concept of introducing into the legislation the possibility to repair cars using used parts.
- In 2024 it was planned to conduct a pilot, when drivers will be warned about the absence of MTPL insurance. At what point do you think they will start introducing traffic camera fines for not having a policy?
- The experiment to check MTPL insurance through traffic cameras with warnings on "Gosuslugi" will be launched in March 2025. It is needed to check whether the system can withstand the load, whether there are not a large number of errors. Initially it was planned to be held within a year, but if the system starts working, there will be no complaints from people and it will be clear that everything works correctly, then it will be possible to start fining for the lack of MTPL insurance on the cameras in 2025.
This initiative is very important. For example, it helps to reduce the number of traffic jams. Because accidents cause big problems on the roads. And if both car owners have a policy, they can draw up a Europrotocol with photo fixation for damage of up to 400 thousand and part ways.
Now some regions have already come out with an initiative to start fining for the lack of MTPL insurance by cameras even before the end of the experiment.
- How many drivers in Russia drive without MTPL insurance?
- Currently, about 10% of drivers drive without MTPL insurance. Camera fines for not having a policy will help reduce this number tenfold.
People will pay 800 rubles for the absence of a policy, as they do now. And for repeated violation the fine increased to 3-5 thousand.
"In 2025, the insurance community will discuss with government agencies to increase the limit of payments on MTPL insurance"
- In 2025, several changes are being prepared. For example, will begin to work DSW. What kind of clients might be interested in it?
- This type of insurance, such as DCF, is more suitable for those who are interested in getting not a fixed income, but try to get the maximum from the way the mutual fund works. Among the advantages of DSJ can be noted a fully transparent calculation of the cost of the investment part and the amount of investment income, the ownership of units of UIF by the client, which implies the possibility of pledge, exchange of units and so on, targeted transfer of capital - the appointment at the conclusion of the contract beneficiary to whom the payment will be made, the system of guaranteeing life insurance contracts in case of revocation of the license of the insurer. DSL will become effective in Russia on January 1, 2025, but ISL will still be sold until the beginning of 2026.
- What other innovations are being prepared?
- From January 2025, CMTPL insurance will begin to operate in new constituent entities of Russia. People are already starting to buy policies there.
We also hope that next year the system of short policies will be fully operational. And not only for CMTPL, but also for other types of insurance. I think that they will be further developed.
Next year we expect changes in home insurance. The market is preparing proposals on how to modernize the law to make it cheaper and more convenient for citizens.
- Will you start discussing an increase in the limit of the payout amount for CMTPL insurance?
- Currently, only 3% of accidents require a payout higher than the MTPL limit of 400,000. At the same time, an increase in the threshold will lead to an increase in the price of the policy for all car owners. We have been waiting for the trend of rising prices for spare parts to stop, but it seems that there will be fluctuations next year as well.
I think that in 2025 the insurance community will discuss with government agencies the increase of the limit of payments under CMTPL insurance. For example, in terms of increasing the payout for life and health damage up to 2 million rubles. This could lead to an increase in the price of the policy by 15-20%, but the payout would quadruple at once. We will also discuss raising the property damage threshold to 400,000. But first we would like to wait for prices for spare parts to stabilize.
