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. Last Updated: 07/27/2016

Car Insurance Start Date, Rates Set


Prime Minister Mikhail Kasyanov

Prime Minister Mikhail Kasyanov on Monday finally set the date and rate of nationwide mandatory automobile liability insurance.

Legislation to remove Russia from the small coterie of countries where one can get behind the wheel uninsured was signed in April, with promises that tariff rates and premiums would be fleshed out later.

Insurance firms drew up suggestions for what tariff rates might be charged and submitted them for the government's consideration, which Kasyanov finally signed off on Monday, according to the government's official web site

Insurers said they needed the payment framework to be in place more than a month in advance of the July 1 start date in order to be prepared to provide insurance to all drivers.

Andrei Shchavelyov, a spokesman for the Russian Union of Auto Insurers, or RSA, said few changes were made to their proposals. Kasyanov changed only one coefficient used to determine an insurance policy rate, he said.

The basic premium amount is set at 1,980 rubles ($64) per year for individuals and at 2,375 rubles ($77) for companies, though the premium rate may be raised or lowered depending on the region, the driver's age, experience and driving record, the car's power, the number of people who use the same car, the car's age and the insurance term.

Premiums for Moscow and St. Petersburg are double the base premium.

"Traffic density is much higher [there] than in the rest of the country," said Shchavelyov, who is also a former traffic police officer.

One year of coverage for the average Lada owner will cost around $126 per year in the capital. The owner of a powerful Mercedes may end up paying upward of $300.

Only the RSA's 102 member companies will be licensed to provide third-party auto insurance, excluding many small insurers that cannot afford membership costs of between $30,000 and $60,000.

Many auto owners are frustrated with the new rules because they have been left in the dark while information from the government has been confusing, sometimes contradictory.

"There hasn't been any clear information," one owner of a Nissan Tirana complained, saying he was under the impression that foreign car owners would pay something like 4,000 rubles per year while Zhiguli owners would pay a different price.

Shchavelyov promised the insurers' association would make efforts to clarify the situation, saying a public information campaign had been planned, complete with advertisements on billboards along roads, on the sides of public buses and on television and radio.

The public relations blitzkrieg will launch this summer and run through Jan. 1, when the grace period ends and "when everybody who does not have insurance will start getting fined," he said.

Andrei Slepnev, the RSA's general director, said in March that the introduction of mandatory automobile liability insurance would boost the capitalization of the country's insurance companies by $600 million to $700 million.

Damages from road accidents annually amount to 2 percent of gross domestic product, or 190 billion rubles ($6.1 billion).

There are 150,000 car accidents per year in Moscow alone, Shchavelyov said.

The auto insurance market has been estimated to be worth $2.5 billion annually, but it is not clear whether it will be profitable to insurers who will be liable for up to 120,000 rubles ($3,870) for car repairs and 400,000 rubles ($12,900) for death or serious injury on their policies.

Even if the terms are not ideal for insurers, Shchavelyov said, most will agree to sell it because it will give them access to the country's 35 million drivers, who may then buy other insurance policies from the same firm.