OSAGO development history

History of compulsory motor liability insurance in Russia and abroad

The history of automobile insurance begins almost immediately after the invention of cars in the United States. Compared to foreign experience in this area, Russian experience is minimal, and the car insurance system can be called quite young.

When did OSAGO appear in Russia and why was it needed? Has MTPL always been compulsory insurance and why? When was the law on compulsory motor liability insurance adopted? What are the features of car insurance in foreign countries? We will answer these questions in this article.

History of the origins of car insurance

2018 marks the 120th anniversary of the first American auto insurance policy. Travelers Insurance Company, a well-known insurance company in the states, entered into a car insurance contract with Dr. T. Martin. The conditions were simple: for 12 and a quarter dollars, the policyholder was guaranteed a payment of 5 hundred dollars if his car was damaged in a collision with a horse-drawn vehicle. Since almost the entire population of America traveled on horses, and cars were purchased by wealthy citizens, a similar accident in 1898 was very likely.

At that time, victims of horseless carriages had already appeared, and one of the accidents, which ended in death, made it into all the newspapers. In the summer of 1896, a car at a speed of 6 km/h hit and killed a confused woman. The cause of the accident was not the speed of the car, but the limited visibility for the driver due to horse-drawn carriages and the shock of the lady who saw the carriage without a horse for the first time. After a long trial, the judges agreed that there was an accident, but many motorists thought about safety on the road.

The American's insurance was his own idea, as well as the result of simple calculations: in the USA, there were 4 thousand cars for every 20 million horses. The example of a resourceful doctor did not become contagious. It took about 30 years for mass production of cars to be established at Ford factories. In the 20s of the last century, the car ceased to be a rarity and turned from a luxury item into ordinary transport. Massachusetts authorities in 1925 legalized compulsory auto insurance, and compensation was received by the injured party, i.e. insured the motorist's liability to pedestrians and other road users. It was still possible to insure the car, but it was not necessary. The legislative initiative was accepted with enthusiasm by car owners, since cars were still expensive and drivers had little experience.

European countries followed the example of the United States, and by the middle of the last century, almost all Western European countries had laws on compulsory car insurance. Austria introduced civil liability insurance for motorists in 1929, and a year later a similar bill was approved in the UK.

The car became a means of transportation across borders, and there was a need to legalize a universal car license that would be valid throughout Europe. The Green Card has become an insurance policy that has guaranteed payments in any European country for more than 50 years. The policy got its name because of the light green color of the forms that are issued to drivers.

The emergence of car insurance in the Russian Federation

At the end of the 20s of the last century, there were too few cars in Russia for the car insurance initiative to qualify for consideration and approval at the legislative level. Only in the late 60s the number of cars increased so much that the issue of insurance was considered at the level of the Council of Ministers. In 1984, the Resolution “On measures to further develop state insurance and improve the quality of work of insurance authorities” was approved, which became the basis for the creation of “auto-combi”. This is an insurance contract concluded by a citizen on a voluntary basis, and the object of insurance is not only the car, but also passengers and their property.

Auto insurance has already developed further in Russia. In 1991, CASCO was introduced on a voluntary basis, but was not widely used. Since 1993, draft laws on compulsory motor insurance began to be submitted to the State Duma. Employees of the Russian Insurance Supervision and the Department of Transport were preparing a draft of the relevant legislative act. The period of consideration, study and modification of the law on motor vehicle citizenship was long; the act came into force only in the summer of 2003, and implementation was carried out in several stages.

Implementation of the Law on Compulsory Motor Liability Insurance

In 2000, State Duma deputies for the first time heard a bill that regulated the introduction of compulsory civil liability insurance in Russia. A fundamentally new factor was that the insurance contract protected not the policyholder himself, but the victim. When considering the bill, deputies were guided by statistics according to which many motorists were confident that they would never cause an accident. This has made car owners unwilling to voluntarily insure the risks of pedestrians and other road users. The future law provided for the conclusion of a compulsory motor liability insurance agreement for each vehicle owner.

One of the main problems in approving the law was tariffs. A lengthy justification and coordination of the issue led to the fact that the law “On compulsory civil liability insurance of vehicle owners” No. 40 was approved by the State Duma and endorsed by the President only on April 25, 2002. The catalyst for adoption was:

requirements for potential member states that want to become members of the World Trade Organization. One of the conditions for membership is the presence of a compulsory car insurance system;
the experience of European countries where car insurance has proven its effectiveness as a system of financial compensation for losses;
growth of the insurance market in the 90s.

The entry into force of the motor vehicle law was delayed for 15 months so that car owners could get used to the new realities of insurance. At the same time, already in 2003, insurers felt an influx of clients, since many drivers with voluntary insurance policies went to their insurance company for a mandatory motor vehicle license.

In 2005, the Law on Compulsory Motor Liability Insurance was discussed in the Constitutional Court. The CC meeting was initiated by deputies of the State Duma, the Kurultai of the Altai Republic, and the Regional Duma of the Volgograd Region. People's representatives pointed to the illegality of compulsory car insurance, the high cost of the policy, which pensioners cannot afford, as well as the amount of insurance payments that does not cover the loss. A Rostov resident also joined the deputies, who considered it illegal to require several cars to be insured if they are owned by the same owner. The judges rejected the claims and confirmed the legality of car insurance and the right of the state to set tariffs, but ordered a minor amendment to be made to one of the articles. Insurance companies, which spent significant sums on advertising, training of specialists and insurance policies, were satisfied with the court's decision.

The problems that the auto citizen solves include:

guaranteeing compensation for losses to the party injured in an accident;
insurance of the car owner against substantial amounts of compensation that he is not able to pay on his own;
motivation to follow traffic rules.

Since 2015, it is possible to draw up a contract online, and a printed copy of the policy is valid when checked by traffic police officers. To date, the legislative act has been supplemented and changed more than 25 times, and the 2017 amendments are not final.

V.A. Tarachev, who presented the Law on Compulsory Motor Liability Insurance to the State Duma in 2000 and served as deputy head of the Committee on Credit Institutions and Financial Markets, considers amendments to the law a natural process in the development of auto insurance in Russia. The practical implementation of legislative norms is complicated, according to the deputy, by the lack of standards for assessing losses after an accident. This allows insurers to underestimate the amount of compensation. You also need a database with information about all insurance cases. Without it, any driver can avoid the application of an increasing coefficient by applying for a policy with a new insurance company. As for the tariffs, the developer of the law claims that they are not inflated, since insurance companies spend more than 80% of the collected amounts on paying compensation.

OSAGO in Europe

European insurers are focused on profit from the placement of financial resources received from policyholders. Interest on deposits is the net profit of insurance companies. About 90% of contributions from clients go towards compensation for insurance cases, and the payment limits in Europe are much higher than in the Russian Federation, and for some items the amount of compensation is not limited. Since 2002, in European countries the state has ceased to regulate the size of tariffs; this function is performed by insurers. European motor insurance, which was initially focused on vehicles (this practice is relevant for the Russian Federation), today is based on personalized insurance, when the cost of the policy is determined by the data of the car owner.

The German insurance market leads among European countries in terms of premium collection. Mandatory liability insurance was legalized here in 1939. Today, the policy is not cheap for Germans: the owner of a middle-class car, who has operated the car for 3 years without accidents or road traffic violations, must pay from 1.2 thousand to 1.5 thousand. euros annually. The insurance company has the right to withdraw money from the client’s account without his consent if the policy is expired and re-issuance is required. As compensation for material damage, the insurer will pay a maximum of 511 thousand euros, and in case of damage to health - up to 2.5 million euros to each victim. After an accident, police officers arrive only if there are injured passengers or drivers. Issues of material damage are the responsibility of insurance companies.

England ranks second in terms of the amount of annual insurance fees; car insurance has become mandatory since 1930. A metropolitan English taxi driver has to pay 2 thousand pounds to cover annual insurance, but it includes 2 policies - OSAGO and CASCO. The insurance company will compensate for material damage up to a maximum of 250 thousand pounds, and for damage to health there is no limit: the amount can be any, up to several million. It is prohibited to drive on the road without a policy, and the document must indicate all accidents in which the driver has been involved.

In Italy, up to a thousand euros will be required for a compulsory car insurance policy; the final cost depends on a number of factors that concern the car owner. Insurance payments for health damage are not limited, and the insurer will cover material losses if the amount of compensation does not exceed 775 thousand euros. Car depreciation is not taken into account when calculating the amount of payments.

In France, a driver involved in an accident is required to correctly draw up an accident diagram and send a proper notification to the insurance company. If there are no victims, then there is no need to wait and call the police. The insurance premium ranges from 700 to 1000 euros, and the maximum compensation for loss will be 460 thousand euros. Payments for health damage are not limited; the victim, having become disabled due to an accident, can count on a lifetime pension from the insurance company.

Since 2008, Spain has legalized checking policies while driving, and fines for an expired document or its absence are comparable to the full annual cost of insurance. For example, a motorcyclist will be fined 1.25 thousand euros, and a truck driver will pay 2.6 thousand euros.

In Europe, car owners have long applied for a policy online and received the original documents by mail.

Conclusion

Civil liability insurance for car owners in the Russian Federation is at the stage of formation. The tariff system, the amount of insurance payments, and the legislative regulation of damage assessment require improvement. Following the practice of European countries, car insurance in Russia focuses on a personalized approach to each driver.

History of car insurance

The history of car insurance began with the advent of cars into everyday life. This happened around the eighties of the 19th century, after which the first automobile insurance policies appeared in the nineties of the same century. The first car damage insurance policy was issued by the English Insurance Company in 1895. The new product was based on fire and theft insurance policies and the experience of civil liability insurance. When concluding the first car insurance contracts, insurers were primarily interested in the vehicle itself; the driver’s characteristics were not taken into account. At the beginning of the 20th century, insurance companies began to appear that were entirely focused on car insurance.

By the end of the twenties, a number of British insurance companies realized the need to establish uniform rules for car insurance. Therefore, general principles of this type of insurance and minimum tariff rates were developed by carrying out calculations based on combined accumulated statistical data. These calculations formed the basis for the signing of a “tariff agreement” among companies belonging to the Association of Insurance Companies (later included in the Association of British Insurance Companies). The companies that signed the “tariff agreement” were mainly large mixed-type companies, i.e. dealing with different types of insurance. Clients who insure their home and life with one of the companies almost certainly insured their car with the same company, i.e. the agreement was not formally a monopoly. However, by the mid-thirties, these companies had about 60%-70% of the British car insurance market in their hands.

Still, a significant share of the car insurance market was in the hands of companies that, for one reason or another, did not sign the tariff agreement. These were both large insurance companies engaged in various types of insurance, and small companies focused on auto insurance. Usually they gave tariffs slightly less than those established in the tariff agreement, with the expectation, however, that their activities would allow them to make a profit. In addition, these companies were improving policy conditions, trying to offer their clients more convenient insurance coverage.

Another alternative way of developing the insurance market in England was carried out by insurers of the Lloyd's company. They offered flexible insurance programs of both individual and group nature.

During World War II, competition in the car insurance market weakened significantly as only a small number of cars were in private use.

The post-war period was characterized by the emergence of so-called “mushroom” companies. These companies sought to quickly grow their insurance portfolios by significantly lowering premiums and increasing commissions. Optimization of business processes within the company and the use of more advanced business management technologies allowed them to significantly save on costs. In addition, they also transferred some of the issues related to the settlement of losses to insurance brokers. Increasing competition from these companies led to the cancellation of the tariff agreement in 1968. However, such fast-growing companies did not have the necessary knowledge and operational experience, which subsequently led to a number of bankruptcies.

Compulsory liability insurance for vehicle owners was introduced in the UK in 1930 under the Road Traffic Act. Insurance coverage was unlimited, but extended only to liability for damage to the life or health of injured third parties. However, such policies were rarely offered for sale; the more common type of policy contained liability insurance for damage to the property of third parties. Following the adoption of the second EEC Motor Insurance Directive in 1983, all liability insurance policies must contain a third party property indemnity clause, which has not made any major changes to contracting practice in the UK.

About two-thirds of car insurance contracts also contain a provision for compensation for damage to the insured vehicle. There is no practice of separate insurance for liability and damage to a car in the UK. A typical option is as follows. The company offers a choice of six types of coverage, namely: damage caused to third parties only, as well as damage from fire and theft and “combined” damage, with four deductible levels, including zero. Extensions to standard forms of coverage, such as individual accident benefits, are also possible.

In the USA, legislative regulation is of utmost importance for insurance activities. The first acts regulating insurance activities adopted in the United States date back to the early 1800s. Insurance legislation was designed to protect local insurers from competition from foreign companies or companies from other states, as well as to protect the population from the arbitrariness and insolvency of insurance companies.

The first automobile insurance policy in America was issued to Dr. Truman Jay Martin in 1898. The policy was consistent with the existing form of insurance for liability arising from the use of horses and mules. The contract for insuring the car itself against damage was first signed in America in 1902. The first major loss was settled by the Boston Insurance Company in 1904. William Wallace was driving from Boston to Worcester when his fuel tanker exploded. The first law requiring car owners to carry liability insurance appeared in Massachusetts in 1927.

Currently in America there is a tendency to refer to the policyholder’s credit history when concluding a CASCO insurance contract. A client with a bad credit history is considered unreliable and is charged an increased rate. Customers with a very good credit history may qualify for a discount. More than 90% of American insurance companies use a client's credit history when assessing his attractiveness to the company. In Russia, such a factor cannot yet be taken into account due to the lack of credit histories of most policyholders, since the official maintenance of credit histories available for use by other market participants began only in 2006.

In the Soviet Union, the insurance industry was monopolized by a single insurer - Gosstrakh. Gosstrakh authorities have carried out their activities on the territory of the USSR since 1921 on the principles of economic accounting, i.e. the state did not directly bear any responsibility for insurance operations. Thus, automobile insurance, as well as other types of insurance handled by Gosstrakh, existed in the former USSR for several decades.

An important date for the development of domestic automobile insurance is January 1, 1969, when new Rules for voluntary insurance of vehicles owned by citizens were introduced, developed taking into account a significant improvement in insurance conditions and satisfying the requests of their owners. Starting this year, voluntary insurance of vehicles began to be carried out for the first time in case of theft, death or damage in connection with theft of vehicles. Until now, car insurance was not a separate type of insurance, but referred to voluntary property insurance. At the beginning of 1977, in the country as a whole, 11% of vehicles in personal use were voluntarily insured; in Moscow, the number of voluntary insurance contracts for vehicles reached 86.3 thousand and the coverage level was 33%.

The new edition of the rules, which came into force in January 1978, expanded the list of insurance objects and took into account the needs of car owners. Since the beginning of 1986, “auto-combi” insurance contracts began to be concluded in the country, under which insurance coverage was provided for cars along with luggage and drivers (in case of death as a result of an accident). Since 1989, Gosstrakh's liability began to extend to injuries sustained by the driver and the insured as a result of an accident.

Currently in Russia there are four types of car insurance. This is CASCO car insurance, i.e. insurance against damage and theft; compulsory motor vehicle liability insurance (MTPL); voluntary motor third party liability insurance, in various companies this type is designated by the abbreviations DAGO or AGO; insurance under the “green card” system. At the same time, it can be argued that there are only two types of car insurance in Russia - insurance against damage and against theft, i.e. CASCO and civil liability insurance, which, due to the peculiarities of legislative regulation, takes various forms.

Compulsory motor third party liability insurance was introduced in Russia on July 1, 2003 by Law No. 40-FZ of April 25, 2002. Since January 1, 2004, the use of vehicles on the roads of the Russian Federation has become impossible without a compulsory motor liability insurance policy. The MTPL policy covers damage related to the liability of the vehicle owner to compensate for damage to the life and/or health of third parties as a result of an accident or to the property of third parties. The maximum compensation “in terms of compensation for harm caused to the life or health of several victims is 240 thousand rubles and not more than 160 thousand rubles when harm is caused to the life or health of one victim; in terms of compensation for damage caused to the property of several victims - 160 thousand rubles and not more than 120 thousand rubles in case of damage to the property of one victim.” The culprit of the accident covers damages in excess of the specified limits at his own expense or through a voluntary motor liability insurance policy.

In what year was OSAGO introduced in Russia?

In this article we will look at the year in which compulsory motor insurance was introduced, as well as the history of the emergence of compulsory motor insurance and the path of its development in Russia and the world.

The history of compulsory insurance

2018 marked 120 years since the first car insurance policy was issued. The document was issued by Travelers Insurance Company. The insured was Dr. Martin Truman. He purchased a policy to protect his car from collisions with horse-drawn carriages.

According to the terms of the agreement, Martin paid a fee of $12. If an insured event occurred, the company had to compensate him for losses in the amount of $500. The purchase of the policy was Truman's own initiative, since the risk of a collision with a horse-drawn carriage was extremely high. In America at that time there were only 4,000 cars for 20 million horses.

The doctor was prompted to conclude an insurance contract by an incident in 1896, which was covered by all media. The driver of a car moving at a speed of 6 km/h hit a woman. The victim died. The cause of the accident was not the speed of the car, but the limited visibility due to the carts.

The judge ruled the incident an accident, but many car owners began to think about safety. The idea of an enterprising American did not find widespread support. The lack of interest of citizens in car insurance was explained by the small number of vehicles on the roads.

In the 20s of the twentieth century, the Ford company launched mass production of cars; they turned from a luxury item into a common means of transportation. In 1925, Massachusetts made auto insurance mandatory. Such a policy guaranteed compensation for damage to the injured party. That is, the object of insurance was the driver’s civil liability. Those who wished could take out a policy for their car. But this type of service was voluntary.

Following the example of the United States, almost all European countries began to introduce a compulsory car insurance system. By the middle of the last century, most states already had a prototype of the current MTPL. Around the same time, an insurance system appeared that operated in all European countries.

The emergence of compulsory motor liability insurance in Russia

Discussions about the introduction of compulsory car insurance in Russia began in 1924. But due to the small number of cars on the roads, the issue was considered irrelevant by the country's leadership. In the second half of the twentieth century, the number of cars in the USSR increased so much that the authorities again raised the topic of introducing a policy system.

In 1984, the Council of Ministers adopted a legislative act “On measures to further develop state insurance and improve the quality of work of insurance authorities,” which gave impetus to the development of domestic auto insurance. The contract was concluded at the initiative of the client and provided for the protection of cars, passengers and their property.

In 1991, the first CASCO policies began to appear, but they were not widely used. The idea of introducing mandatory compulsory motor vehicle liability insurance arose only after the collapse of the USSR. The first draft of the relevant law was submitted to the State Duma for consideration in 1993. The document required serious edits and improvements.

Development of a modern law “On compulsory motor liability insurance”

The development of No. 40-FZ “On OSAGO” took almost 10 years. After the first version of this document was presented and rejected in 1993, the adjustment took 7 years. In 2000, the law on compulsory motor insurance was again introduced for consideration. It was adopted in the first reading, but serious improvements were still required.

The main innovation was the insurance object. Previously, in Russia, with the help of a policy, car owners protected only their cars and passengers. Now it has been decided to insure the liability of drivers to other road users. In the event of an accident, the losses of the injured party are compensated by the company that entered into an agreement with the culprit of the incident.

One of the main problems of the bill approved in 2000 was the tariffs for compulsory motor liability insurance. Due to the lengthy coordination and justification of prices for the “auto citizen”, the final version No. 40-FZ was adopted only on April 24, 2002. In order for drivers to gradually get used to the new insurance requirements, it was decided to postpone the entry into force of the document for 15 months. Thus, the date when compulsory motor liability insurance was introduced in the Russian Federation is considered to be July 1, 2003.

The introduction of compulsory insurance has caused discontent among motorists. Many of them pointed out the illegality of such an “imposed” service. In 2005, No. 40-FZ was even considered in the Constitutional Court, which recognized compulsory car insurance as acceptable.

Introduction of electronic insurance

In 2015, the Russian Government adopted amendments to No. 40-FZ, allowing drivers to obtain insurance via the Internet without visiting the office. Not all companies introduced such a function and continued to sell policies only during a personal visit of the car owner.

The latest amendments to No. 40-FZ in 2017 and the approval of new instructions from the Central Bank regarding the procedure for issuing e-OSAGO and the operation of insurers’ websites obligated insurance companies to provide the opportunity to purchase a document online.

The emergence of compulsory car insurance occurred more than 100 years ago. Despite its centuries-old history, MTPL in Russia is a relatively young and new product.

The emergence and development of compulsory motor liability insurance in Russia

Today, having insurance is a common obligation for every motorist. The policy is perceived as one of the necessary pieces of paper in a set of driving documents. But it was not always so.

The emergence of the car insurance system in Russia

The introduction of insurance in the domestic auto world, compared to many foreign countries, started not so long ago.

Auto insurance owes its history to the United States. This is understandable, because it was in this country that the automobile was invented. Following individual episodes of voluntary insurance, some states in America already in the 20s of the 20th century legalized compulsory auto insurance. The whole country followed them. This practice soon spread in Europe.

Compulsory auto insurance appeared in the United States shortly after the first accidents.

In Russia they started talking about compulsory insurance much later - in the second half of the 20th century. And they moved from talk to action only in 1984, when the corresponding act of the Council of Ministers of the USSR was adopted. And then we were talking about voluntary insurance. This step did not bring any significant results.

The issue of introducing insurance policies began to be discussed more actively at the government level after the collapse of the USSR. The development of market relations and increased availability of vehicles contributed to an increase in the intensity of automobile traffic, and hence the number of accidents on the roads. In addition, inclusion in the processes of globalization required the country to participate in many international agreements. In particular, the presence of compulsory car insurance was one of the requirements for joining the WTO.

All this could not help but push legislators to introduce the MTPL system. Moreover, the legal foundations for this were laid in 1996 by the first edition of the Civil Code. Liability insurance was provided for in Article 931 of the Civil Code.

Adoption of the law on compulsory motor liability insurance: goals and history

The MTPL law emerged as a result of many years of work with the participation of many government agencies. The bill was first submitted for discussion to the State Duma in 2000. The first version of the law “On compulsory civil liability insurance of vehicle owners” was approved on April 25, 2002. Its entry into force was postponed for 15 months so that car owners had the opportunity to navigate the new realities and conclude an insurance contract.

In 2005, the law on compulsory motor liability insurance was submitted for discussion in the Constitutional Court. The initiators were deputies who considered that it contradicted the current legislation, the tariffs were too high, and the payments did not cover possible risks. However, the court did not satisfy their demands.

OSAGO tariffs to this day remain a controversial issue for legislators, insurers and car owners

The objectives of the law remain unchanged to this day. Classic insurance primarily protects the policyholder himself and his property in the event of unfavorable events for him in order to compensate for the damage received. Auto liability insurance is aimed at compensating damage to other persons injured by the operation of vehicles. According to the law, the culprit must pay damages to the victims, but he does not always have the means to do this. And forced collection is troublesome and takes a lot of time.

The law on compulsory motor third party liability insurance solves several problems at once. The main ones:

Guarantee of payments to the injured party. The maximum size is established by law. For compensation of material damage, a limit of 400 thousand rubles has been established, and for compensation for harm to the life and health of victims - 500 thousand rubles. If the amount to be paid exceeds the difference, the person responsible for the accident pays the difference.
Fixation of payment terms. Today the deadline for the insurance company to make a decision is 20 days.
Unification of conditions. Despite the huge selection of insurers on the MTPL market, the car owner can be sure that the contract is concluded according to standard rules.
Policyholder protection. If an insurance company experiences financial difficulties or ceases to exist, the MTPL agreement still remains in force, only the obligations are transferred to the Russian Union of Auto Insurers.
Predictability of tariffs. Base rates are regulated by the state, and insurers are limited by limits.
Responsibility of car owners. Legislators believe that a driver without compulsory motor liability insurance in the event of an accident through his fault risks leaving victims without compensation. Therefore, the violator is held accountable under Article 12.37 of the Administrative Code, for which a fine of 800 rubles may be imposed. And if there is a policy that has expired, or the document is not with you, then the person will pay 500 rubles in accordance with Article 12.3 of the Administrative Code.

The cost of insurance has been the most controversial issue since the adoption of the law to this day. The state is trying to maintain a balance between the interests of car owners and insurers. In each specific case, the price depends on the make, condition and year of manufacture of the car, region, length of service and age of the policyholder, and his driving history.

Major changes to the legislation on compulsory motor liability insurance

Since its adoption, the law on compulsory motor liability insurance has undergone many changes. Practice has made its own adjustments to the development of insurance conditions. In 2018, the 42nd edition was adopted, which will come into force on June 1, 2019.

A significant set of amendments to the law was adopted in 2014. The main changes were:

OSAGO ceased to apply to all types of trailers, with the exception of trailers for towing;
functions on financial policy in the field of compulsory motor liability insurance were transferred to the Central Bank of Russia;
amendments have been made to the procedure for terminating contractual relations and returning insurance;
the procedure for preparing documents for an insurance company without the participation of the traffic police according to the “European protocol” has been clarified.

The current MTPL system is uniform in all insurance companies

Since 2015, Russian car insurance has been supplemented with a pleasant innovation for car owners - the contract can now be concluded remotely, and the electronic policy has been equated to a paper document. This practice was used before, but traffic police officers, citing a gap in the legislation, issued fines.

Further reform led to the next package of changes, which appeared in 2017–2018 and are reflected in the current edition. The reform affected the following aspects:

In-kind compensation has been established as a priority for compensation for harm to victims. This form is aimed at combating the activity of “automotive lawyers” who, through long litigation, sought insurance payments in inflated amounts. From now on, the insurance company pays for the repair of damaged vehicles at a car service station with which the insurer has an agreement. Monetary compensation is reserved for a limited number of cases (harm to life and health, mutual fault, significant amount of damage, etc.);
tariffs have increased, which is aimed, firstly, at compensating for unprofitability of insurance activities, and secondly, at increasing the limit of insurance payments;
The minimum insurance period is limited to one year.

Some changes will only come into force in 2019. From October 2019, the terms of compensation under the “European protocol” will change, and the limit of insurance payment without involving the traffic police will be increased. And insurers will have the opportunity to deviate from base prices upward by up to 130% from September 2019 and up to 140% from 2020.

Taking into account the relatively young history of the motor vehicle industry, there is every reason to believe that increased competition between insurance companies, increased legal literacy of drivers and judicial practice will continue to inspire people’s representatives, that is, representatives of the legislative branch, to search for optimal solutions to effectively reform the motor insurance system.