Damage payments under compulsory motor insurance (OSAGO) in Russia will increase by an average of 8-9% after the updated spare parts price guide. Yevgeni Ufimtsev, head of the All-Russian Union of Insurers (VSS) and the Russian Union of Motor Insurers (RSA), announced that insurers do not plan to raise policy prices to the same extent.
The Central Bank of Russia had approved new rules for the formation of average spare parts cost guides used by insurers in OSAGO damage calculations. According to the new rules, which will take effect on July 11, RSA will not include equivalent parts that are more than 70% cheaper than original parts in the average price calculation; the average cost of consumables will be calculated without taking discounts into account.
Ufimtsev, speaking on the sidelines of the Central Bank of Russia Finance Congress held in St. Petersburg, stated that the average increase in damage payments will become clear with the new guide to be published on September 19. Emphasizing that the increase will not affect all car brands equally, Ufimtsev said, "The biggest rise will be seen in car brands that have left the Russian market and where equivalent parts are often used in repairs."
The RSA head noted that the impact on policy prices will be much more limited, saying, "Of course, it will also affect policies, but the increase here is much more modest; it will not exceed an average of 5-6%, because spare parts do not have such a large share in the OSAGO price."
Ufimtsev said that the main factor determining the insurance price is the total loss-premium balance in compulsory motor insurance. He stated that steps taken in the fight against fraud could mitigate the impact on prices. Reminding that policy premiums will continue to vary based on drivers' accident history, Ufimtsev said, "This will also be unequal: the price will increase more for drivers involved in accidents, and less for others."
