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Government regulation is an essential element and the principle of organization of insurance business in any country. The purpose of state regulation is to ensure the formation and development of well-functioning insurance market, creating the necessary conditions for the activities of insurers with various organizational and legal forms, protecting the interests of policyholders.
The system of government regulation is the following.
1. Licensing - Registration of insurance companies and the issuance of licenses to conduct certain types of insurance. License to conduct insurance business issued in accordance with the Terms of the licensing of insurance activities on the territory of Russia. These conditions determine:
* - Requirements for the licensee (the fact of registration as a legal entity, the fact of payment of the authorized capital and the requirements for its size depending on the type of insurance);
* - List of documents applied to the application for a license (the founding documents, the documents confirming payment of the authorized capital, the business plan for the first year of operation, the calculation of the ratio of assets and liabilities on the appropriate form, a statute on the formation and use of insurance reserves, if necessary plan for the reinsurance, the balance of the application report on the financial results of the last reporting date, the deployment plan of insurance reserves, the rules on types of insurance, calculation of insurance rates on the appropriate form, information about the director and his deputy);
* - The order of consideration of documents and issuance of license;
* - How to publish information about the insurer licensed.
For the issuance of the license fee is charged to the established order, which comes to the budget. In identifying violations of the insurance organizations state agency oversight of the insurance business has the right to suspend or restrict a license or take a decision on its withdrawal. Refusal to license its review, suspension and limitation of actions may be appealed in court.
2. Control to provide the financial stability of insurers. There are five basic factors that ensure the financial stability of insurance company:
* Capital adequacy;
* The size of liabilities (including technical reserves);
* Allocation of assets;
* Portfolio of risks transferred to the reinsurance;
* Tariff policy.
More questions of financial stability of insurance companies considered in a special article.
3. Develop forms and procedures of statistical reporting and monitoring the timely submission of financial statements of insurance companies.
4. Taxation of insurers and policyholders.
5. Other measures of state regulation of insurance activity.
