Cancellation of imposed insurance

The problem with the imposition of insurance on citizens has been taking place for more than a year. Anyone who has ever had to take a loan knows that the bank manager stubbornly offers insurance services to the last. The reason is simple – it is an important source of income for banks.

But formally do not dig: the bank and the insurance company are different legal entities. Theoretically, you can insure in any company. But only with the approval of the loan then problems may arise. But in person, and even more so in writing, no one will confirm that the denial of a loan is associated with the choice of another insurer.

The wild law of the market operates in the same way both in supermarkets and in the banking services market. Basic products are advertised at a significant discount. And the seller supplements the margin at the expense of by-products and services.

Some citizens have found an interesting way out – to sign an insurance contract, get a loan, and then cancel the insurance after a few days!

Despite successful jurisprudence for the recovery of funds paid for unused insurance policies, banks continue to include illegal provisions on the non-refundability of insurance premiums. Do banks have bad lawyers? I guess not. It is simply more profitable to break the law and make single returns than to abandon the harmful practice as a whole. This is my value judgment, just in case.

Analysis of the regulatory framework
On October 13, 2020, the Supreme Court of the Russian Federation canceled another illegal decision, reinforced by illegal rulings of the appellate and cassation instances, on the refusal to satisfy the claim of citizen R. against VTB Bank JSC.

The court of first instance appealed to Part 3 of Article 958 of the Civil Code of the Russian Federation, according to which

in the event of early cancellation of the policyholder (beneficiary) from the insurance contract, the insurance premium paid to the insurer shall not be refundable, unless otherwise provided by law or the contract.

But the nuance here is that insurance companies, like banks, by virtue of the law, fall under the regulation of the Bank of Russia (CB) – art. 7 of the Federal Law of July 10, 2002 No. 86-FZ “On the Central Bank of the Russian Federation”.

Reversing the court decisions, the Supreme Court referred to Bank of Russia Ordinance No. 3854-U dated November 20, 2015 “On the minimum (standard) requirements for the conditions and procedure for the implementation of certain types of voluntary insurance”, in part one, which states:

When carrying out voluntary insurance (with the exception of cases of carrying out voluntary insurance provided for in paragraph 4 of this Directive), the insurer must provide for a condition for the return of the paid insurance premium to the insured in the manner prescribed by this Directive, in the event that the insurant withdraws from the contract of voluntary insurance within five working days from the date of its conclusions, regardless of the moment of payment of the insurance premium, in the absence of events in this period that have signs of an insured event.

The insurance company MUST provide for the possibility of returning the insurance premium in the insurance contract itself within 5 days from the date of conclusion.

In paragraph 5 of the Review of the practice of considering disputes by courts arising from relations on voluntary personal insurance related to the provision of a consumer loan, approved by the Presidium of the Supreme Court of the Russian Federation on June 5, 2019, in relation to such legal relations, it is explained that since the borrower in this case is an individual person, then the above Directive of the Bank of Russia applies to him.

This fact was not taken into account by the lower courts. They believed that since the bank is the beneficiary of the insurance, the rule on the five-day return of the insurance premium is not applicable.

As a result, the decisions of the lower courts were annulled, and the case was sent for a new trial to the court of appeal. Great win for banking consumers!