INTRODUCTION
Currently, there are no barriers that limit the right of EU insurance companies to establish daughter companies in the life and non-life insurance sector, but limitations are still in force on the non-EU insurers. Removing all barriers has been discussed at the Russia-WTO negotiations.
Within the framework of WTO negotiations, an agreement has been reached that will permit at some stage in the future, foreign companies to operate through branches, without the need to establish a daughter company in Russia.
Under Russian corporate legislation, the legal definition of a branch is different from that in European or other countries and the committee supports the development of a transition plan for the types of services that foreign companies will be allowed to sell through their branch offices in Russia. Changes are needed to Russian civil and/or insurance law on the legal status of foreign branches in Russia before insurance can be transacted on a branch basis. A similar problem exists in the banking sector. Experts from all sectors should combine their efforts to help the Russian authorities develop proper legal definition of a branch.
Russia still imposes a limit on the percentage of foreign capital allowed in the insurance industry (25% of the total market capital). At the present time, the ratio of foreign capital to total Russian insurance sector capital is well below that limit, but after WTO accession, this existing limitation could create practical problems which might limit expansion of foreign companies in Russia.
3. THE ANALYSIS OF DEVELOPMENT OF THE MARKET ON INSURANCE BRANCHES
The intermediaries in the market are insurance brokers, agents, consultants and a variety of oiher people operating with differing titles. In some respects they all vary slightly in what they do, how they do it and in their responsibility for their actions.
Agent.
An agent in law is one who acts for another but in insurance the term is usually reserved for the individual or firm whose main occupation is in another field.
Broker.
A broker is an individual or firm whose full-time occupation is the placing of insurance with insurers.
There are two categories of brokers:
(a) Lloyd's brokers: they are the only persons permitted to place business at Lloyd's.
They a)so place business in the company market;
(b) other brokers (just termed "brokers").
Both categories are full-time professionals who must be registered in accordance with the Insurance Brokers (Registration) Act 1977.
They normally act as agents for the insured (Lloyd's brokers always so), and are generally remunerated by a higher rate of commission than agents. By calling themselves "brokers" they are holding themselves out to be experts in the field of insurance and have a higher duty of care to their clients than agents.
Insurance Consultant.
Another category of intermediary is the insurance consultant, who may act in a similar manner to an insurance broker.
Industrial Assurance Agent.
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