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Compulsory Third-Party Motor Liability Insurance: Joining the Green Card System - International Law Office

International Law Office

Insurance - Russia

Compulsory Third-Party Motor Liability Insurance: Joining the Green Card System

February 03 2009


On January 1 2009 Russia finally joined the international civil liability motor insurance system, known as the 'green card' system.

The system ensures that claims initiated by victims of traffic accidents involving foreign drivers can be settled under the law of the country in which the accident took place. The international green card certificate is officially recognized by the governments of the 45 member countries and serves as evidence of a compulsory third-party liability insurance policy while using a motor vehicle in a foreign country.

Pursuant to Order 337-P, which was issued on March 19 2008, the Russian Association of Motor Insurers participates in the system as a national insurance bureau. Its main function is to organize insurance companies' activities within the framework of the green card system by:

  • establishing professional rules and insurance tariffs;
  • guaranteeing the obligations of bureau members arising from green card operations;
  • operating a unified reinsurance programme; and
  • ensuring the recording and settlement of green card claims in Russia.

In order to bring Russian law into line with the system's requirements, the Law on Compulsory Third-Party Liability Motor Insurance (40 FZ/2002) has been amended.

According to Article 31 of the new law, the owner of a vehicle registered in the Russian territory must be insured against liability for inflicting damage to the life, health or property of third parties in a foreign country during a period of temporary use(1) of a motor vehicle. Where vehicle owners are registered in Russia and are temporarily using the vehicle in a foreign country where international insurance systems apply, the terms of their compulsory third-party insurance must comply with the requirements of such systems.

Russian insurers will issue green card certificates with terms and conditions that are the same for all countries participating in the international insurance system, and will settle claims within the limits of indemnity and in accordance with the applicable laws of the country where the accident took place.

Before Russia joined the system, representatives of Russian insurers, acting under agency contracts, offered foreign insurers' third-party liability policies at the border of the Russian territory. By January 1 2009, 12 Russian insurers had obtained a licence to issue green card policies. This type of insurance is not compulsory under Russian law and Russian insurers wishing to conduct this line of business must comply with strict conditions in order to obtain a licence.

The law requires that a company be a member of the Russian Association of Motor Insurers and meet the membership requirements of the bureau as stipulated by law and the association's rules of professional activity. The company must:

  • contribute €500,000 to the association's fund;
  • meet the financial requirements under the green card system, which stipulate a 10-year banking guarantee for €11 million and a €200,000 excess of loss per insurance contract;
  • have at least two years’ experience of compulsory third-party liability motor insurance operations and payments;
  • use an automated information system that supports green card insurance transactions;
  • comply with Russian financial stability requirements; and
  • undertake green card insurance operations through an authorized unit to ensure its employees’ compliance with the requirements.

Russian insurers consider this line of business as a service offered in addition to traditional types of insurance, such as motor insurance.

Green card certificate rates are established by the government. For example, an insurance policy for a road vehicle covering all European countries costs Rb1,288 for 15 days - the minimum term - and Rb11,705 for one year. Russia's green card policy meets all European requirements and is valid in all participating countries.

Russia’s entry into the international civil liability motor insurance system is a positive step towards the unification of European insurance regulation.

For further information on this topic please contact Anna Petrova at CMS by telephone (+7 495 258 5000) or by fax (+7 495 258 5100) or by email (anna.petrova@cmslegal.ru).

Endnotes

(1) The period of temporary use must be at least 15 days.


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