Vehicle Insurance Fraud in Russia Affects Both Insurance Companies and Their Customers
This year the vehicle insurance segment in Russia is facing
serious problems. The drastic growth of fraud cases is occurring. This affects
both insurance services providers and car owners willing to obtain an insurance
contract. Russian insurance lawyers are investigating the situation and giving
some advices on dealing with this.
Today car owners in Russia are facing an unusual and
ridiculous problem, massively. It often occurs that owners cannot obtain an
insurance coverage for their cars because of the shortage of blank contract
forms, as insurance companies' managers are telling them. Such cases were
completely unknown just three years ago. Russian lawyers community is
investigating this problematic situation which affects the growth of Russian
vehicle insurance segment.
Such shortages of blank forms are usually occurring in case
one is trying to get a minimum compulsory third-party liability insurance (or
OSAGO) contract. So what could cause the so-called 'shortage' of blank forms
for this type of insurance contract? It appears that it is not the fault of
insurance companies' printers; the reason is the greed of insurance companies
which have developed a peculiar 'marketing scheme'. They are taking advantage
of the problems of car owners who are obliged to obtain this insurance
according to the law.
So, the shortage of blank forms of OSAGO insurance contracts
is being created in purpose. Insurance companies are taking this step in order
to boost sales of other their products and services. Particularly, when a
customer comes to an insurance company wishing to get an OSAGO contract, he or
she is then proposed to sign a life, health or property insurance contract as
well. And in case the customer refuses from this additional service, company's
managers say that there are no blank forms for OSAGO contracts. The customer
cannot verify this statement of course and has either to agree getting this
extra insurance service or just leave.
Basically, in such a situation car owners can complain to
the Federal Anti-Monopoly Service of Russia, the Central Bank of Russia or to
the Russian Association of Motor Insurers. But practice shows that such
complaints do not help much: the only result you can get is a formal report
from a controller about an inspection that was made in the company and about
the lack of law breaches in this company's actions. Consequently people are
turning to insurance lawyers in Russia more and more often.
Still, there is an option. In fact, the service of vehicle
insurance (including OSAGO contracts) is a public agreement according to the
Article #426 of the Civil Code of Russian Federation and therefore an insurance
company does not have a right to refuse this service to a customer. It does not
have a right to force a person to acquire extra services prior to getting an
OSAGO contract as well.
In case you have faced such an illegal refusal from
corporate insurance manager, you need to write down a formal request to sign an
OSAGO contract on paper. You should attach copies of all necessary documents to
it, provide your phone number and register it in the insurance company's branch
office (making sure it is sealed). Most probably, in such a case tomorrow they
will call you and propose to come again to their office to sign the insurance
contract without persuading you to accept any extra conditions.
Now let us investigate the situation with Russian insurance
companies refusing to sign third party liability (usually shortened as KASKO)
contracts.
Russian insurance companies are having certain problems in this
sphere themselves. Central offices are cancelling KASKO services in regional
branch offices because of drastic growth of customer fraud which economic
security services of branch offices are failing to mitigate.
The reason is that the number of insurance fraud 'business'
schemes which include acquiring an insurance contract for an expensive car and
then doing purposeful damage to it (such as cutting the upholstery, making
scratches or fissures on the glass) has grown several times during the last two
years. Thus, a car owner can receive the compensation from the insurer which is
calculated based upon official car dealers' prices for repair parts. At the
same time, the damaged car would be actually repaired at a usual low-cost
repair shop.
Flaws in Russian insurance legislation result in such fraud
schemes being very profitable for those who choose this kind of 'business'.
According to information received by Russian lawyers during their professional
activities, such schemes are now increasingly used by people who were not
involved in fraud schemes earlier.
Economic security departments of insurance companies cannot
effectively counter such fraud attempts because they do not have any legal
means to perform deep investigations. All they can do is to recommend refusing
such claims. But sometimes it makes the situation even worse for an insurer
when a car owner whose claim was refused wins this case in a court and receives
a sum even bigger than was claimed initially.
The emerging wave of such fabricated insurance claims in
Russia has urged many insurance companies to stop providing the service of
KASKO insurance and even to quit the Russian insurance market at all. The major
part of Russian-based insurance companies used to have the vehicle insurance
services as their primary source of income and did not completely realize how
many risks are there in this niche; so now these businesses are having a hard
time.
So here is an advice for car owners willing to get a vehicle
insurance contract in Russia from Russian insurance lawyers. It is better to be
very careful when choosing an insurance provider: in case of this company's
bankruptcy you would not be able to claim your payment via the Russian
Association of Motor Insurers as this organization can only help to compensate
losses by OSAGO contracts. Therefore, you would have register as a creditor in
the formal bankruptcy procedure, and the more creditors there would be, the
smaller chances of getting some compensation you would have.
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