OREANDA-NEWS. The Bank of Russia has worked out new requirements for investment activity of insurance companies. The regulator’s website has published the respective draft ordinances on the procedure for investing insurers’ capital and insurance reserves.

The innovations are designed to unify investment rules of financial market participants and to check bad investment practices in the insurance market.

The plan calls for a revised approach to equity investment and establishing a list of foreign exchanges whose quotation allows securities to be eligible to cover insurers’ capital and insurance reserves.

In addition, the regulator specifies the requirements for property valuation. Asset valuation (including property) is relevant for all segments of the financial market and is currently taking a system-level approach. Limits, imposed by the Bank of Russia in the insurance market, are a first step in this direction.

Another important change is a considerable shrinkage in insurers’ opportunities to invest in mortgage participation certificates (MPC) and place capital and insurance reserves in unit investment funds. Besides, investment in agricultural land and land plots for private housing construction is supposed to be banned.

The Bank of Russia also intends to establish a closed list of assets falling within restrictions on related party investment.

All insurers are planned to be obliged to record securities placed with special-purpose depositories, in order to enhance control over the quality of securities insurers’ funds are invested in.

The new investment rules will ensure higher quality and safety of assets capital and insurance reserves are invested in.