Ingosstrakh Gets Regional Prize

In what critics say was a rigged tender, the Moscow region's government recently awarded local insurance giant Ingosstrakh the right to be the sole coordinator of its insurance program, estimated to be worth $400 million a year.

The victory gives Ingosstrakh, which beat out eight competitors, the only nongovernmental seat on the region's insurance council.

The victory also makes Ingosstrakh essentially the regional government's only commercial source of advice on which of its properties should be insured, how and for how much they should be insured for, and how and where the premiums should be invested.

Representatives of some of the losing bidders privately accused Ingosstrakh, which has assets of 8.6 billion rubles ($304 million), of playing dirty, and insist that its victory was a foregone conclusion.

Pavel Solovev, head of public relations for Ingosstrakh, dismissed the allegations and said that his company would simply act as the region's specialist partner.

Even so, insurers fear that the region has chosen an insurance broker that will act alone in assessing property risks and selecting insurance companies for coverage — at their expense.

Under the Finance Ministry's regulation on "coordinator-insurers," Ingosstrakh, by winning the tender, will essentially manage all of the region's insurance flows, said one of the losing participants, who asked not to be named.

"Ingosstrakh [can now] organize things to its own benefit," the participant said.

And there is plenty to organize:

According to Finance Ministry data, about 40 local insurance companies and branches of about 20 of the capital's insurers are working in the region. Last year, regional companies collected about $180 million in insurance premiums, while the total volume of the regional insurance market is valued at $400 million per year.

According to the formal criteria of the competition, participants had to have experience in the insurance market for five years or more; charter capital of not less than 50 million rubles; assets of not less than 2 billion rubles; and a company portfolio containing more than 55 percent insured property and risks.

Critics said the conditions were written specially to ensure that Ingosstrakh emerged triumphant. Ingosstrakh's Solovev, however, called this the "same old fuss over any tender."

But of the eight bidders, only Ingosstrakh met all the criteria.

The losing bidders were Military Insurance Co., Military and Medical Insurance Co., National Insurance Group, Spasskiye Vorota, RESO-Garantia, Zhiva and the Industrial Insurance Co.

Moscow region officials could not be reached for comment.