Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Sales of Life Policies Drop 45%

Property insurance outsold life insurance for the first time in the third quarter, according to a quarterly report released by the Finance Ministry on Monday.

Overall, total premiums collected in the first nine months grew to 220.5 billion rubles ($7 billion), an 8.3 percent increase in ruble terms over the same period in 2001, the ministry said.

Total premiums collected in the third quarter, however, fell by almost 15 percent to 67.3 billion rubles, while life insurance premiums, commonly used in company wage schemes, plummeted 45 percent between April to June and July to September.

Life insurance has tended to account for about half of all voluntary insurance, largely because of its role in tax minimization schemes. The volume of new life insurance premiums grew 6 percent in the first three months of the year to 33.7 billion rubles, before falling 5 percent and 45.3 percent in consecutive quarters to 17.5 billion rubles.

From Jan. 1, any payments made on life insurance policies of less than five years, or within the first five years of longer policies, will be subject to the 13 percent personal income tax. Premiums paid are not tax deductible.

"Usually [tax] schemes are entered into for one year, so now there's no sense in using the schemes that were used earlier," said Yevgeny Reshetin of Expert Rating Agency. He said that such schemes would likely disappear in 2003.

"This isn't all bad," Reshetin said. "It's better to look the truth in the eyes and have lower numbers."