Russian banks deal with risks in two ways. The first is to develop internal instructions in the event of force majeure, and the second is to form reserves. But both of these methods do not give the desired results. Therefore, financial institutions began to use insurance of bank deposits and assets in order to receive real compensation for losses. At the same time, risks are divided into two groups. The first applies to absolutely all organizations that work in the market, and the second - only to banks.
purpose
Bank insurance allows you to build an effective group of products focused on strengthening the relationship between the financial institution and consumers. This is especially important for credit institutions that are trying to establish reliable relationships with customers, and those that are trying to increase the volume of products.
Kinds
Demanded for all organizations is insurance:
- Buildings from natural disasters, fires and other unpredictable events.
- Property from loss and damage.
- Electrical equipment and PC from the destruction of information.
- Money supply from theft.
- Transport from theft and accident.
- The lives of employees.
Bank insurance system includes protection:
- Any property of the bank.
- Hardware and software from hacker fraud.
- Insurance of bank cards against the risks associated with their use.
- Loans and deposits.
Scheme of work
Banking risk insurance is a system of interaction between banks and an insurance company (IC). The rapid development of the banking system allows every citizen to turn his dream into reality: buy an apartment, car or large household appliances. By signing a loan agreement, the client agrees to the terms of the loan and is deprived of the right to choose an insurance partner.
If the object of the pledge is new property, then practically no questions arise. The situation is worse if the client needs to pledge property that he already owns. The client needs to terminate the old contract and draw up a new one with the bank's IC partner.
In rare cases, a financial institution may make concessions to a client and draw up a bank insurance contract with another company. And everything seems to be good: the bank and the IC get their profit, and the client is the desired object.
But not so simple
The fact that SK received a license to carry out activities in the market does not mean that it has become a partner of the bank. In this case, accreditation refers to the process as a result of which the IC receives confirmation of the compliance of the services provided with a certain standard. In this case, the rating is assigned by the bank, not the state. This is the problem. Not only is it not clear how this process is consistent with the functions assigned to the bank, it is also not clear by what criteria the selection is made.
Therefore, banks rarely cooperate with “alien” ICs. Most often, it does not even reach the signing of the contract. The process ends even at the stage of negotiating tariffs and rates. By agreeing to cooperate with IC Bank, firstly, it dictates its conditions, and secondly, it claims not to “rent”, but to a full-fledged agent fee. This is explained by the fact that the financial institution receives less profit in the struggle for the competitiveness of its rates. The main argument is as follows: the bank is an intermediary in attracting IC clients. Its size of the commission should be 15-30% of the amount of the premium, which depends on the size of the loan.
So, bank insurance is really a tool of interaction between financial institutions and insurance companies. But it is not always beneficial to the client.
Benefits
Insurance makes it easier to manage risks, provided that there are no even greater risks that reduce the economic effect to zero.
Any conflicts with customers negatively affect the reputation of the financial institution. The presence of the policy allows the bank to transfer these problems to the insurer.
Protection is provided for risks that arise unexpectedly. The bank thus receives its benefits. For example, he no longer needs to create reserves for possible losses. The probability of an incorrect risk assessment is reduced.
Bank loan insurance brings additional income from the sale of a new product. The premium can be up to 50% of the monthly payment. With the growth of supply, the demand for the product increases, the image of the institution increases, and the client base grows. Ultimately, the interaction of the bank with the UK reduces the cost of doing business. The insurer receives similar benefits. He has reduced the cost of doing business, growing customer base and increasing the amount of premiums. Clients get access to more insurance products, which can be obtained at competitive prices.
Comprehensive Protection
The growth of risks in the monetary relations segment stimulates an increase in the interest of financial institutions in insurance. Today, banks insure more property risks: ATM, money supply, goods and materials. However, staff fraud can create more serious consequences, especially during times of financial crisis. Therefore, banks are gradually moving to comprehensive insurance (Banker’s Blanket Bond).
Voluntarily or forcibly?
In the West, the use of BBB by banks is considered prestigious and mandatory. For example, in the USA, the FDIC (Deposit Insurance Corporation) obliged all banks working with individuals to draw up such agreements. In Ukraine, the first discoverer was FUIB, which in 2002 issued the BBB in the IC “ICCA”. In Russia, for the first time, this product was offered on the market by IC Ingosstrakh in 1997. First of all, BBB is executed by banks, which are subsidiaries of Western financial institutions.
BBB Bank insurance includes:
- Protection of assets from dishonest actions of personnel.
- Compensation of risks associated with a computer system.
- Compensation of costs in the amount of the claim against the director.
It is cheaper to buy an BBB policy than to conclude a separate insurance contract for each of the possible risks. In addition, economic crimes are complex, it is difficult to determine the cause of the loss: illegal actions or employee error.
The popularity of this product is not unfounded. Banks incur losses by eliminating robberies, thefts and falsification of documents. According to statistics, 40% of crimes are committed by ordinary employees, 30% - managers, 15% - former employees. The average robbery is estimated at $ 1.9 thousand. Perpetrators are prosecuted in 82% of cases. If the theft was committed using software, then the average production amount is $ 250 thousand, and only criminals are caught in only 2% of cases.
Requirements
Comprehensive insurance can be issued by far from every financial institution. One of the conditions for participation in the program is the assessment of the security system by a surveyor, an international audit company or a reinsurer. Not every bank is ready to open its internal information for evaluation. Therefore, most financial institutions dwell on property damage insurance.
Another obstacle is the high level of deductible. Payment for insurance is 2.5-5% of the amount of coverage, which can reach several million dollars. For example, Alfa-Bank entered into an agreement in which the amount of coverage is $ 80 million. Not every financial institution can afford such costs. The franchise is also very high. Insurance will not cover minor losses associated, for example, with minor theft. Losses in the amount of $ 50-100 thousand are subject to compensation.Therefore, in order to receive compensation for stolen cash, it is more profitable to conclude a contract of insurance of funds and in parallel to draw up a contract of insurance of property from actions of third parties.
Money in the morning - chairs in the evening
Not every UK is ready to offer such a product to banks. BBB is an individual insurance. The development of the program is carried out after a detailed study of internal procedures, reporting and the bank's security system. The price of the product should cover the company's costs associated with the formation of reserves, risk reinsurance and surveyor services. It will be difficult to say whether it will be acceptable to the bank.
An integral part of the BBB is reinsurance. In the Russian Federation, ICs cannot cover all risks under such agreements at the expense of their own reserves. Therefore, universal companies make it easier to enter the international market. Most of the reinsurance risks of Russian insurers are taken by companies such as Lloyd’s, ACE European Group, Aspen Insurance, etc.
Of great importance is the qualification of employees of the company, who are intermediaries between the financial institution and the reinsurer. Whatever company undertakes to provide BBB, most of the work is done through international brokers. Therefore, trust, professionalism and efficiency are key factors in choosing an insurer.
Bank insurance in Russia
In the Russian Federation, certain risks are currently insured. The most popular types are credit insurance and plastic cards. One of the features of the domestic system is the change in the cost of different risks. In particular, operations with a high share of the human factor (for example, ATM policies, money supply) are valued more expensive, and “ordinary” risks (for example, property protection) have significantly decreased in price.
Past economic crises had a double effect on the market. On the one hand, market volumes decreased significantly, and on the other hand, banks began to perceive bank insurance as an instrument of protection against force majeure. This indicates that in Russia this segment is at the development stage, although in Europe it is much more than banking.
Credit insurance
This is a bank risk insurance related to the provision of a loan. This direction has several subspecies.
Loan repayment insurance. Such a policy was very popular in the 90s in Russia. Insurance is provided for the duration of the loan agreement. If the loan is not repaid, SK pays the bank 90% (depending on the deductible) of the amount owed. But after a change in law in 1996, this type of policy was banned. Non-repayment of a loan is not a basis for applying for a policy.
Bank insurance in case of loan repayment is provided both for individual transactions and for the entire loan portfolio. The amount is determined based on the total debt, including interest. The liability limit of the insurer ranges from 50-90%.
Mortgage insurance for the borrower.
Insurance of a collateral object is issued in case of its destruction or damage. All costs associated with the purchase of the policy are borne by the borrower. Sberbank provides such banking insurance in three ways:
- The beneficiary becomes the creditor. He pays the premium. But all expenses are included in the cost of the loan.
- The beneficiary is the borrower. So that the bank does not lose control over the payment process, it obliges the policyholder to pay all insurance premiums through a specific account.
- The policyholder is the borrower, the beneficiary is the bank. This traditional scheme is most often used by banks in the Russian Federation.
Export insurance. The need for this policy arises when a resident concludes an agreement with a non-resident for the export (import) of goods. A non-resident draws up an insurance policy in the UK to assess the risk of customer insolvency.In world practice, such transactions are subject to compulsory insurance. Credit Insurance Corporation assesses the solvency of a non-resident using information from a rating agency.
Bank deposit insurance system
CER is a government cash protection mechanism. Its essence is to make payments to customers from a special fund in the event of a license revocation from a bank. Bank deposit insurance prevents panic among investors, ensuring system stability and reducing the cost of overcoming the effects of the crisis.
CERs operate in 104 countries. In the CIS countries, it applies only to deposits of individuals, and, for example, in Canada - to deposits of only residents. In general, the value of CERs has decreased, as states prefer to sanitize financial institutions rather than eliminate them.
In the Russian Federation, bank deposit insurance is carried out on the basis of the same Federal Law No. 177. The policy applies to funds of individuals and individuals (since 2014), which are on the accounts of financial institutions registered in the Russian Federation. The following are subject to exclusion:
- funds of lawyers, notaries, if the account was opened for professional activities;
- unnamed contributions;
- funds transferred to trust;
- deposits in foreign branches of banks;
- transfers without opening an account;
- funds for compulsory medical insurance;
- electronic tools.
Within the framework of this law, bank cards (other than credit cards) opened by individuals are also insured.
On 04.10.17, 803 institutions were participating in the CER program in the Russian Federation. The maximum amount of compensation that customers can receive from the DIA in the event of a license withdrawal from the bank is 100% of the deposit amount, but not more than 1.4 million rubles. Insurance of bank deposits in foreign currency extends to the amount recalculated at the Central Bank rate at the date of the insured event. If a depositor has a loan and a deposit in one bank, then the amount of compensation is reduced by the amount of counterclaims.
Bank cards
According to The Nilson Report, 20.56 billion cards were issued in 2017. In the Russian Federation, as of 2013, there were 0.85 cards per citizen, and by 2017 - 1.98. At the same time, the Russian Federation uses one of the last places in the rating of cash use. More than 20% of operations are carried out without bank cards. This is not surprising. According to statistics, approximately 30% of PIs do not accept cards for payment. According to experts, this indicates a low level of economic development of the country.
Such low indicators can be explained not only by the mentality and conservatism of the Russians, but also by the high-profile affairs of Master Bank, Investbank, etc. Another problem is the underdeveloped infrastructure. In Stockholm, for example, some institutions do not accept cash for goods and services. A similar measure in Moscow with St. Petersburg may work, and in small towns it will cause a collapse.
One of the solutions to the problem is to increase the level of account security. For this purpose, chips are integrated into the cards. The amendments to the Federal Law “On the National Payment System” made an important contribution. Now banks are obliged to inform customers about all operations on the account, and customers - to inform about illegal operations within 24 hours from the moment of debiting.
Risk management can be improved by issuing bank card insurance. Sberbank, for example, pays compensation to customers in case of phishing, scrimming, theft that occurred after withdrawing money from an ATM, card loss. However, the best service tariffs are provided so far only for co-branded cards.
Issue price
According to the Central Bank in 2015, 1.58 billion rubles were illegally written off from the account of Russians. Although the law is in force in the Russian Federation, according to which banks must return stolen funds from the account, in fact only half of the applications from the victims were satisfied. Nevertheless, banks actively offer people to insure cards.
Vostochny Express offers its customers a policy whereby they can receive payment for an illegal operation committed anywhere in the world. A similar policy of Promsvyazbank applies only to Internet operations. Of the ten largest institutions in the Russian Federation, Sberbank, Alfa-Bank, VTB24, and Home Credit offer insurance services. Depending on the conditions of the selected package, contributions range from 720 rubles. up to 6 thousand rubles, and the amount of payment - 20-350 thousand rubles. To receive compensation, the client must timely (12-24 hours) report the theft of funds to the bank and provide a statement from law enforcement agencies.
The bank undertakes to return the funds within 3-10 days from the date of signing
insurance act. This document is drawn up 7-10 days after receipt of all documents by the insurer. If the police begin an investigation, the payment deadline will be rescheduled. Although, by law, the bank must decide on compensation for funds within 30 days.
Thus, policyholders can receive payment from the bank in three cases: theft of funds using a card, fake plastic and robbery at an ATM. In other cases, the client will have to compensate for losses at his own expense.