Russia plans to launch a state-owned reinsurer
Russian president Vladimir Putin has signed the law which amends the Law on Organisation of the Insurance Industry in the Russian Federation to create a state reinsurer. The National Reinsurance Co will be established as a joint stock company which will be 100% owned by the country's central bank.

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The Russian President has recently signed the law which amends the Law on Organisation of the Insurance Industry in the Russian Federation to create a National Reinsurance Company (NRC), which was published accordingly in state's official web-portal. Previously, a bill in this regard was adopted by the State Duma of the Russian Federation in the third and final reading on 21 June 2016, after 2 months of debates.The NRC will be established as a joint stock company and 100% of the shares will be owned by the Central Bank of Russia, with the further possibility to sell a part of the shares. The state reinsurer will accept in reinsurance the property insurance risks from emergencies situation and all sanctions risks.Also, it stipulates an obligation of ceding a mandatory 10% quota of the risks to the state reinsurer, which will not apply on the risks of compulsory types of insurance (MTPL, Green Card insurance and life insurance). Thus, the law introduces treaty-facultative reinsurance (retrocession). The reinsured (retrocedent) must offer 10% of the reinsured risks to the NRC, while the NRC can accept this share, decrease it or refuse to accept it.Also, the obligations of ceding of risks by the re/insurance companies to the state reinsurer will start sixty days after the date of issue of license to the National State Reinsurance Company, but not earlier than January 1st, 2017.It is expected that the state reinsurance company's capital will be more than RUB 70 billion.During the discussions in 2015 and early 2016, the representatives of both the Russian insurance industry and the legal community has criticize against the bill. Yet, the bill was submitted to the State Duma, where it was adopted with hardly any changes to the initial version.According to Russian experts, quoted by the local publications, the law could lead to different consequences for reinsureds and reinsurers. Thus, reinsureds with complex (primarily international) reinsurance programs could face the need to bring the terms and conditions of such programs in line with the NRC's internal policies on risk assessment and risk management. In particular, these conditions include the scope of the cover, leader and claims control clauses, proof of loss, indemnity payment provisions etc. Reinsurers, must probably, would also lose 10% of their business.