OREANDA-NEWS. The Bank of Russia is set to monitor insurers'  activities including those related to the observance of characteristics of their financial sustainability. The list of financial ratios and the procedure for their calculation is established by Bank of Russia Ordinance No. 3935-U, dated 18 January 2016, published in the Bank of Russia Bulletin.

While building the financial ratios, the Bank of Russia used approaches of the International Association of Insurance Supervisors which consider the key risks arising from insurers' activities.

Based on financial estimates the regulator will carry out the assessment of assets and borrowed funds, profitability, quality and liquidity of assets, reinsurance operations, dynamics of basic financial indicators, underwriting quality, and correlation between assets and liabilities incurred by insurance organisations.

Monitoring will be based on accounting (financial) statements, insurance supervision reports as well as other information the Bank of Russia has access to. Financial ratios will be calculated by the Bank of Russia at least on a quarterly basis.

'The institute for curatorial practice has been launched at the end of the last year, says Igor Zhuk, in charge of the Insurance Market Department.- As of today, curators have been appointed to the majority of insurance companies. Elements of the monitoring institute are already widely used by them. A reveal of any downgrading in terms of financial sustainability and creditworthiness by the curators will trigger proposals for establishing supervision over the insurance organisation.'

By doing so, the Bank of Russia can identify early problems and take action to ensure creditworthiness of insurance companies.

This adds to insurers reliability which is vital to insurance service consumers.