04 february 2022, 13:43

Financial Ombudsmen Svetlana Maximova and Denis Novak take part in the 2022 Claims & Payments conference on «Loss Adjustment in Insurance»

Financial Ombudsmen Svetlana Maximova and Denis Novak took part in the 2022 Claims & Payments conference on «Loss Adjustment in Insurance», which took place in Moscow on February 3.

The event was also attended by representatives of the Bank of Russia, the All-Russian Union of Insurers, insurance companies and others.

Svetlana Maximova spoke at the session «Insured Event as a Moment of Truth: Striking Mechanisms to Protect the Rights of the Insured and the Interests of the Insurer». Referring to the preliminary statistical data, the Financial Ombudsman spoke about the reduction in the number of appeals to the Financial Ombudsman Service (FOS) in 2021. Thus, in 2020, consumers referred over 187,000 appeals to the Financial Ombudsman Service, while in 2021, according to preliminary estimates, less than 180,000 appeals. The largest number of appeals sent were still against insurance companies, followed by appeals against credit organisations.

Svetlana Maximova noted that the tendency to reduce the number of decisions on satisfaction of consumer claims continued in 2021. «We believe this tendency shows that business processes at the financial-institution level have improved and there are fewer situations when a financial institution has behaved in bad faith. We believe that the impact of our institution’s activities on the loss adjustment process is evident here,» she added.

The Financial Ombudsman gave examples of practices detected in the course of appeals, when the consumer is unable to receive a full service. For instance, in settling claims arising out of hull insurance contracts, there are situations where a financial institution cannot provide repairs as set out in a contract and in respect of the specific motor vehicle owned by the consumer and for which the contract was concluded (for instance, at the premises of an official dealer). Svetlana Maximova also spoke about the legal positions the FOS takes when dealing with disputes where additional damages need to be settled (reimbursement of postage, notary fees and accident commissioners’ fees).

Denis Novak was a speaker at the session «Fair Amount and Optimal Timing: Organisational and Legal Aspects of Insurance Indemnity». In his presentation he reminded of the validity of the rule of Law 353-ФЗ «On consumer credit» dated 1 September 2020, which gives the consumer the right to opt out of the insurance contract, which was concluded in order to ensure the performance of obligations to repay such credit after early repayment of the loan. This regulation contains a closed list of features of a security agreement. And financial institutions find ways to minimize or not to pay part of the insurance premium.

Denis Novak said that the Bank of Russia had already drawn attention to such practices. For example, one of the conditions for obtaining a discount on the rate when applying for a loan is insurance for a certain type of risk. Situations arise where the insurance contract includes other types of risks in addition to the risk that does affect the discount. «When the insurance premium is calculated, it turns out that the lion’s share of that premium goes to pay for a risk that has no impact on the discount, but it is all contained in the same contract. The Bank of Russia points out that it is an unfair practice for a consumer to be paid only a portion of the premium for the type of risk that was actually needed and could have an impact on the collateral under the contract when he has decided to exercise his right under the new regulation. In such a case, splitting is unacceptable and it is obligatory to pay part of the premium in full,» Denis Novak said.

He added that the FOS, when considering such appeals, applies this legal position and obliges the financial institution to pay part of the premium for all risks in the contract.

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