Insurance Institute is considered one of the most ancient and developed in the world. However, in Russia, both policyholders and insurers themselves are skeptical about insurance. In the USA, on the contrary, insurance has gained tremendous development and has penetrated into all spheres of life of American citizens.
Sergey Katargin, CEO of Independent Insurance Consultants, spoke about the reasons for this difference and the specifics of insurance in Russia and the United States.
Insurance in the USA
American insurance is considered almost the benchmark in the insurance market in many ways. Its main feature is that it does not obey the national regulatory system, but is controlled separately in each state. This structure has proven its effectiveness throughout history (about 150 years).
The private insurance sector in the United States replaces the social programs of the state or complements them, which is why it is so actively supported by the state. Providing comfortable conditions for the existence of the market is put at the head of state priorities.
Insurance in the US is not just a way to protect against possible risks. Active advertising campaigns of insurance agencies at one time supplemented the image of the American dream, which was forced at the end of the last century through mass media. A high standard of living also contributed to the growth in demand for all insurance services in the country.
Features of American insurance
The insurance market in the United States consists of two types: life insurance and other types of insurance (property, liability). Insurance of property and liability in the United States occupies almost half of the world market – 46%. In total, there are 4,000 life insurance companies operating in the country and 4.5 thousand for property and liability insurance.
- High competition in the market is limited by a strict criterion of market access – the availability of a certain level of capital.
- External competition – on the part of banks – is limited by the state through control over the conduct of related operations by banks.
Regulation of the insurance industry at the state level is expressed not only by providing only solvent companies in the market, but also by the availability of insurance services for all categories of citizens, regardless of nationality, place of residence and other factors characteristic of US policy.
In general, state regulation of insurance is carried out at two levels: the regulation of insurers ’solvency and market regulation. If solvency regulation is based on capital and investment controls, then market regulation is mainly reflected in the pricing policy of insurance companies. Supervisory control over the implementation of the activities of insurers is carried out by the National Association of Insurance Commissioners, which has existed in the United States since 1871.
The peculiarity of American insurance is the presence of insurance brokers and agents in the insurance process – no transaction takes place directly. In addition, insurance is the only industry not subject to antitrust law.
Leading insurance companies in the United States are State Farm Insurance and American International Group.
How to get insurance in the US?
- Insurance in the United States is the responsibility of all citizens. Legal immigrants are also required to secure social security or Social Security (SS).
- SS is a general insurance system designed for working citizens and immigrants; it does not cover medical expenses. Every employee or entrepreneur regularly deducts interest to the SS fund, which provides material assistance to the most vulnerable groups of the population: the poor, pensioners, orphans.
- Social Security Number (SSN) – a unique 10-digit number that is assigned to anyone who legally lives and works in the United States. Analogue SSN – Russian INN. It is advisable to get the SSN immediately after arriving in America, especially since it can be done for free in the Social Security Administration. Without an SSN, you will not be able to get a job, rent a house and get medical care.
Health insurance in America is paid separately and is also compulsory under the Affordable Care Act, also called Obamacare. A resident of the United States who does not have health insurance will be required to pay a fine of 2.5% of their annual earnings.
Only the unemployed, the disabled, people over 65 or the poor can get medical insurance for free. In all other cases, insurance is paid either by the person himself, or in whole or in part by the employer.
There are three types of health insurance (in fact, there are more, but three make up the bulk of the market):
- HMO (“in the network”) – allows you to visit only those doctors and specialists who have entered into an agreement with the HMO. According to it, the therapist issues directions to the rest of the doctors.
- PPO – it can be treated both “online” and “offline”. Under this insurance, the choice of doctors increases, you do not need to receive a referral from a therapist, but it also costs more.
- EPO – differs from the HMO only in that it does not have to receive a referral from a general practitioner, but only on-line doctors will have to be treated.
Dental and ophthalmologic treatment will require separate insurance.
At first glance, the process of obtaining medical care in America seems difficult, but it is easy to understand if you know its main stages:
- Some services are provided for insurance for free, they are registered in the insurance plan.
- For all others, you must pay the Co-pay (surcharge), the amount of which is also stipulated in the contract
- When the amount of funds paid for medical services reaches a certain threshold – Deductible, only Co-Insurance will need to be paid for medical care – a small percentage of the total cost of the service.
- After the limit of the spent money of the insured has reached the level of Out-of-pocket maximum, he ceases to pay for medical services – the insurance company assumes all expenses.
- Every year, the Deductible and Out-of-pocket are reset.
Insurance in Russia
The structure of insurance in Russia is fundamentally different from the American system. You can start with the fact that the modern insurance system in Russia is based on the Soviet form, in which the Ministry of Finance provided a monopoly on insurance services. Literally, it dictated the conditions, and the insurer accepted them without fail.
The USSR insurance organizations subordinate to the Ministry of Finance were used as a financial airbag, which the state could use if necessary. After the collapse of the USSR, Rosgosstrakh was established on the basis of the State Insurance Board, which still exists today.
To obtain a license to carry out insurance activities, the organization must fully pay up the statutory fund before starting work. After payment of the authorized capital, the insurance company is obliged to submit a number of documents to the Insurance Supervision Department, and only then begin work.
Main market players: Alfa Insurance, SOGAZ, Ingosstrakh, RESO, VTB-Insurance, Rosgosstrakh
Distrust of policyholders and insurers
Despite the fact that the insurance market has been successfully developing in the last decade, a certain level of mistrust in insurance among Russian citizens remains. One of the main reasons for this phenomenon lies in the frequent cases of fraud in the market. One-day companies have long been remembered by the citizens of Russia since the 90s.
The view that insurance companies use all the legal subtleties in order not to pay the insurance amount firmly settled in the minds of consumers.
Insurers always risk running into unscrupulous insurers who are willing to go for an imitation of an accident or death to receive an insurance payment.However, fraud in this case will cost the insured much more: up to criminal penalties.
Another reason why Russian citizens prefer to refuse insurance, the presence of OMS – it is free, which already explains a lot.
Personal and corporate insurance in Russia
Personal insurance in Russia is a voluntary medical insurance, risk or cumulative life insurance. Voluntary medical insurance allows insurers to receive higher service in comparison with the CHI system, as well as to enlist the support of the insurance company in a dispute with a medical institution.
LCA insurance does not cover a number of risks associated with chronic diseases, as well as the treatment of cancer or diabetes. For these cases, there are specialized insurance programs.
Insurance in Russia services are provided by all leading insurers: Alfa Insurance, Ingosstrakh, VTB, Renaissance.
Corporate insurance programs at a cost of 1,000 rubles per 1 insured allow you to receive a lump sum payment of 250,000 rubles and help in organizing treatment in Russian clinics. Alternative programs with payment for treatment of oncological diseases abroad cost from 5,000 rubles per employee per year, and the amount to pay for treatment is from 250,000 US dollars.
Corporate insurance takes up almost half of the entire market share – 40%. Most often, companies use voluntary medical insurance and property insurance, followed by insurance of various types of liability: for non-performance of obligations under the contract, for causing harm to third parties.
Employees are divided into 2 types. Those who must insure – people who work with risks. But in this context we are talking about employees whose activities are not associated with risks. In fact, until the last moment corporate insurance was not so much an employee as his family and children were in the lead and one of the five coolest intangible motivators. But on the other hand, we see around the world that its value has partially decreased.
People say: “Stop giving us our money this way, we are able to dispose of it ourselves”. On the one hand, most of the people are still strongly motivated by this, but the trend decline is based on the opinion “we don’t want us to decide where to insure and how to insure us the same.” On the other hand, as an HR, I understand that it is profitable. With a large staff of workers, I get significant discounts, and, therefore, social. the package will be more complete. “
The cost of corporate voluntary medical insurance varies from 10,000 to 250,000 rubles, depending on the insurance program and the level of the clinic.The international VHI policy will cost an employer from 3,000 to 15,000 euros.
Deposit corporate medical care, being an alternative to corporate voluntary medical insurance, allows not only to save up to 40% of funds on voluntary medical insurance contracts, but also to use deposit funds for any medical services (including those not included in voluntary medical insurance). At the same time, tax benefits for the employer are retained.
Separately, it should be said about international staff insurance. International insurance covers all risks associated with the development of cardiovascular and oncological diseases, organ transplantation and orthopedic operations.Treatment is most often provided by leading European and American clinics.These programs are characterized by very high insurance amounts – from 2.5 million euros. The size of the premium depends on the set of options included (inpatient care, outpatient care, drug coverage), the coverage area (Europe or the USA) of the sex and age insured.
International health insurance is provided by companies such as BUPA (United Kingdom), Globality Health (Luxembourg) and Allianz (Munich).
Property insurance is also popular among companies and legal entities.
The property is often the most valuable asset of a company (for example, real estate or expensive equipment). The cost of property insurance is calculated as a percentage of the value of the property being insured. Depending on the object, the tariff can vary from 0.02% to 0.5%.
In addition to the above types of corporate insurance, the Russian market offers companies several different types of industry insurance , which includes cargo insurance, professional activities, banking risks and even insurance for professional athletes.
Gradually gaining popularity liability and financial risk insurance. About 60% of the market for the protection of enterprises is integrated insurance, being optimal for enterprises. The standard package of comprehensive insurance includes: property insurance, liability insurance and personnel insurance.Moreover, the more insurance products the company chooses, the more discount it will receive for the total package.