Bank of Russia adds value to household appliance, gadget and bank card insurance
The Bank of Russia put forward minimum requirements for two common types of property insurance: for bank cards against fraud, as well as for household appliances and gadgets. In particular, the Bank of Russia recommended establishing a basic list of insurance risks, possible exclusions from insurance coverage, and deadlines for claim settlements.
Currently, these types of insurance have a low level of payouts with a high percentage of denied indemnity. Such insurance policies often include coverage of risks, for which the client is already entitled to indemnity if such risks materialise. The law requires that banks refund the money stolen from cards unless they prove that the client violated card usage rules. Household appliance and gadget insurance often covers repairs to which the buyer is already entitled by law. However, the most significant risks for consumers (for example, theft of property or unauthorised debiting of funds in case of violation of card usage rules) are excluded from insurance coverage.
To prevent this, the Bank of Russia plans to draw up a list of risks that must be covered by insurance policies. Thus, card insurance should protect against debiting funds without the client’s consent, and household appliance and gadget insurance should cover the risks of loss (destruction), theft of or damage to the property.
The indemnity payout time for such insurance policies is not currently regulated, and may in practice be unreasonably long. Now the losses will have to be indemnified within 30 days.
Moreover, to protect the interests of consumers and add value to these insurance products, as well as to any other insurance offered to consumers on top of their primary purchase, the Bank of Russia recommends establishing a number of mandatory disclosure requirements.
Insurers will have to inform clients in a key information document (KID) that insurance is an additional service and they may purchase any product without it. It is also proposed to inform clients in the KID that some of the risks covered by such insurance policy are the same risks for which they are legally entitled to indemnity. In this case, policyholders will be able to cancel a duplicate policy at any time during the entire insurance period, and receive a refund of the premium for the unexpired period.
Suggestions and comments regarding the documents will be accepted until 4 December 2022.