Friday, 20 July 2012
Rules, rules, rules…Russia
As noted in the main article within this report Russian companies have now fully joined the international economy and are trading overseas as much if not more than most other European countries. CRE’s Anne-Christin Gröger asked the group of Russian risk managers if there have been any major changes to rules that affect their cross-border risks and whether they are more comfortable with the compliance of their global programmes than in the past. Again she found many common concerns and objectives with risk managers in the UK, France, Germany and elsewhere.
Nadezhda Nosova, Risk Manager at Sistema, said that in her opinion the situation with global programmes has improved recently but added that there are still some notable gaps in such insurance programmes.
“This is not because we do not know what to do with those risks, or because we do not want to cover the risks and do not want to spend the insurance premiums. One of the most important risks we face is business interruption. And yet, it is not very popular to buy such cover in Russia. Under our legislation, the premiums are not tax-deductible,” she said.
Ms Nosova said that the method of calculating the premiums is still not something which is widely discussed and used as a standard approach in Russian companies.
“Our subsidiaries are not alone in this. The waiting period is too long for them, for example, and therefore overall BI coverage doesn’t make any sense. When a large company has to wait 30 days before it gets compensation—forget it. In 30 days we will already plan many other ways of how to go back to business instead of sitting and waiting for all the inspectors. I think insurers should shorten the waiting period to make it more attractive for companies,” she added.
Victor Vereshchagin, President of RusRisk, pointed out that the BRIC countries already account for 40% of the world economy and their growth is higher than that of the US or Europe. “There are other countries, too, like Mexico, South Korea, or Indonesia. They are very active in export business. That is why the rules of the games are changing slowly,” he said.
“For example, the Russian company National Oil Consortium sells oil in three countries. There are many risks which are connected with this business, like contract fulfilment risks. There are also currency risks as we have to convert currencies two or three times.
“One of the big political risks in the past has been problems with the import and export of food. Due to a political row the Belarussian government prohibited the import of milk from Russia, or the Ukraine did not allow sugar to be imported from the Russian Federation,” he said.
Nikolai Ivanov, Risk Manager at Polyus, said that he has also experienced problems with cross-border rules. “We had some problems with the export of raw materials as a result of certain regulations adopted by the European Commission. These regulations claimed that nickel is toxic. So there was a ban placed on exporting it without the appropriate certificates. This was one kind of stumbling block. This meant we had to change our export destination from Europe to Asia. Countries like China or Japan do not have these kinds of restrictions,” he said.