Ministry Orders Insurance Reform

The 100 percent city government-owned Moscow Insurance Co. has had its wings clipped after the Anti-Monopoly Ministry ordered changes to several clauses in a City Hall instruction that gave the company an advantage over its competitors.

MIC is philosophical about the changes and claims the instruction had in any case achieved its results. Now people know where to get their insurance, the company said.

The instruction was signed by Moscow Mayor Yury Luzhkov on Oct. 15 and stipulates that a 10 percent fee paid by social insurance companies to MIC from their funds received from insuring properties for subsequent lease would increase to 50 percent.

MIC was also included in a Moscow program for insuring construction industry risks.

A head of City Halls state legal department said all of these advantages had been canceled, while clause 3, which made insurance with MIC mandatory for property belonging to state enterprises, had been amended.

"Now the word mandatory does not feature and the name of the Moscow Insurance Co. is absent," said a representative with the mayors legal department.

MIC management has managed to control their disappointment.

"Its all for the best," said Vladimir Kruglyak, general director of the company.

The instruction was circulated throughout the city.

"Everyone understands who is who," he said. In his opinion the heads of Moscow enterprises and state structures now understand where they should invest.

Parts of the instruction remain providing for MICs charter capital to be increased from its present 3 million rubles ($107,700) to $40 million by 2002 and the sale of 49 percent of MIC.

The Anti-Monopoly Ministrys department for Moscow and the Moscow region studied the case of a violation of anti-monopoly legislation by the Moscow city government on Oct. 19.

Kruglyak explains the energetic reaction of the anti-monopoly bodies as comes down to the plots of competing Moscow insurance firms.

The head of one such company confirmed insurance companies had tried to focus the attention of the Anti-Monopoly Ministry on the advantageous City Hall instruction.