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. Last Updated: 07/27/2016

Insurers Will Fight Presidential Veto

President Boris Yeltsin opened the door to the Russian market for foreign insurers this week, but local firms said Thursday that parliament could still slam it shut again.

"Nothing has changed," said Igor Yurgens, head of the All-Russia Insurers' Union. "And nothing will, at least until November or December, since the legislative process is not over."

Meanwhile, some Russian insurers remain worried about the prospect of foreign competition.

Boris Hait, president of Spasskiye Vorota insurance group, said foreign firms would now seize the market.

"Unlimited access of foreigners to our insurance market can mean only one thing ? a transfer of significant cash flows under their control, which is what they are striving for," Hait told Interfax-Vremya newspaper.

"That is why limits are quite reasonable," he said.

However, analysts said foreign insurers were in no hurry to increase their current market share of 3 percent.

Only a handful of big foreign insurers, including Germany's Allianz and Rus-AIG, operate in Russia.

Russia's insurance sector is hugely underdeveloped, with total premiums of local firms much lower than that of a big international company.

Local insurers offer far fewer services than foreign companies and few Russians have even basic life or property insurance policies.

Yeltsin vetoed an insurance bill that would have essentially barred new foreign companies from entering the market.

The bill required foreign insurers to have a 25-year record in their home country and not less than two years of work in Russia to be allowed into the Russian market.

The bill would also have limited foreign insurers' capital to 15 percent of the overall capital of insurance companies working in Russia. There were no such limits before.

However, it canceled a 49 percent limit foreigners can have in the capital of an individual company.

Reuters and other news services had earlier this week reported erroneously that Yeltsin had signed into law the proposals on foreign insurers, which had been criticized by U.S. authorities.

The bill angered the international insurance community, with the U.S. government warning it could harm Moscow's chances of entry to the World Trade Organization and disrupt U.S.-Russian commercial relations.

But analysts said one should not take it for granted that U.S. lobbyism would be stronger than that of Russian insurers.

"[Russian] insurers are still rich enough to [lobby successfully] for overriding the veto," said Vladimir Mau, head of the government's Center for Economic Reform think tank. "The possibility of overriding it is quite high."

Yurgens agreed: "It is quite real."

The State Duma, the lower house of parliament, can initiate a procedure for overriding the veto when it returns from its summer recess in the autumn.

The bill will have to win two-thirds of Duma votes for the veto to be overridden. Yeltsin will then have to sign it.

Duma deputies have faced numerous accusations that large numbers of parliamentarians ? even entire political parties ? are willing to sell their votes to the highest bidder.

Although such allegations have been lent an air of credibility by several surprising changes in voting patterns on a variety of bills, no concrete evidence of vote-selling has emerged.