Title: Insuring a Brighter Future: The Emerging System of Russian Insurance Law
Abstract: I. Introduction When the Soviet Union disbanded in 1991,(1) Russia and the other former Soviet republics replaced a seventy-year-old political structure with an organization of several autonomous nations loosely joined in the Confederation of Independent States (CIS).(2) In addition to changing the maps, the breakup also signified vast economic and legal changes within each republic. No longer did the central government own and control all the factors of production.(3) The dismantling of the controlled market and state monopoly system demanded new concepts of legal theory to deal with private property rights, commercial contracts between independently owned businesses, and other incidents of a free market economy.(4) While change has come in many areas, the Soviet system left behind a legacy that still impacts political, economic, and legal reform in today's Russia.(5) An example of a developing segment of the Russian economy which has undergone a radical transformation -- and still continues to evolve -- is the insurance industry. The dissolution of the Soviet Union left the insurance industry intact but severely underdeveloped.(6) Lenin's New Economic Order, introduced in 1921, ultimately established a market exclusively occupied by two state run companies which operated as a branch of the Ministry of Finance.(7) When the legislative-mandated monopoly of the insurance market ended in 1988, the number of privately owned insurance companies quickly rose into the hundreds.(8) This growth created an instant need for regulation in all areas of insurance law -- particularly financial stability and consumer protection.(9) While the sophistication and detail of the legal system governing insurance has not developed as rapidly as areas such as banking,(10) the current legal framework has come a long way in establishing general guidelines for regulation.(11) Despite these accomplishments, more detailed legislation is necessary. The responsibility of enforcing current insurance laws and developing new ones is largely in the hands of administrative agencies which operate essentially unchecked by other branches of the government.(12) This system has led to an ambiguous and somewhat arbitrary set of rules in such areas as licensing procedures, reserve requirements, and restrictions on methods of operation.(13) Such problems can undoubtedly retard a country's ability to compete in the world market and attract foreign investment. As the world economy becomes increasingly global, waking giants such as Russia and the other former Soviet states will be forced to accelerate their technological and financial stature or find themselves labeled as developing nations. While economic indications of Russia's economic health are at best mixed,(14) Russia's metamorphosis -- from a controlled market economy dominated by state planners to an economy utilizing free enterprise concepts and less government interference -- thus far has led to greater privatization.(15) Continued privatization, as well as economic stability, will demand that Russia's legal, political, and cultural attitudes towards entrepreneurial endeavors mature further. Gearing a nation towards economic, rather than military, competition with Western nations requires new attitudes and the implementation of services virtually unknown and unused under Communist rule.(16) Given the current state of the insurance industry, the introduction of additional legislation will be crucial to Russia's economic development. However, before discussing these needs, the present legal scheme should be examined and its strengths and weaknesses analyzed. To accomplish these objectives, this study of Russian insurance law will be divided into several parts. Part II provides a historical outlook on the events which have shaped the insurance market in Russia both before and after 1991. Part III will survey the existing legal system, focusing on laws currently in force as well as proposed legislation. …
Publication Year: 1997
Publication Date: 1997-03-22
Language: en
Type: article
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