The insurance activity is the activity related to civil-law relations on protection and ensuring valuable interests of both physical, and legal entities in case of certain events (insured accidents) the result of which is causing to the insurant significant material damage. The monetary indemnity is paid by the insurer (usually an insurance company) from the fund created at the expense of insurance premiums – insurance contributions. Legislative regulation of insurance activity in the Russian Federation is based on the Civil Code of the Russian Federation, the Federal Law of 27.11.1992 № 4015-1 "On the organization of insurance sector in the Russian Federation" and Federal laws on special types of insurance (the Federal Law of 29.11.2010 № 326-FZ "On compulsory health insurance in the Russian Federation"; The Federal Law of 25.04.2002 № 40-FZ "On compulsory motor TPL insurance" (hereinafter – the Law on CMTPL) and others).
The concept of insurance dispute and its causes
Insurance in the Russian Federation has evolved significantly in recent years through the creation of conditions for development of insurance protection system of valuable interests of citizens, legal entities and the state. However, despite upward trend of insurance activities in Russia, progress in this area is followed by growing number of disputes with insurance companies (insurers) connected with their unfair activities as well as a violation of the law. The insurance dispute is a conflict arising between an insurant and an insurance company and its settlement process. Irrespective of a type of insurance (voluntary or compulsory), a subject of an insurance dispute is negligent and improper performance the obligations by the party to the insurance contract or a direct nonobservance of its terms and conditions. As practice shows, an insurance company (insurer) causes an insurance dispute most often because of:
˗ its claim denial (for example, see the Stavropol regional court Appellate decision of 15.06.2016 re № 33-4174/2016), or
˗ significantly understatement of the amount of the insurance benefit (for example, see the East Siberian Federal District Arbitration court decision of 08.09.2016 № F02-4583/2016 re № A33-19098/2015), or
˗ delays in payment of insurance compensation without day.
Thus, the policyholder, having faced one of the abovementioned problems when the insurance company does not pay the monetary indemnity (insurance compensation) owed to him under the insurance contract, is often forced to seek professional assistance to protect his valuable interests in the dispute settlement.
Methods of settlement of an insurance dispute
There are several possible methods of dispute settlement to protect the violated rights in a dispute with an insurance company:
1. Report to the police. It should be noted that this method is not always effective as the existing legislation refers insurance disputes to the category of civil-law relations and it is extremely difficult to transfer them to the criminal ones, and therefore, in most cases, there is a high probability of failure when filing a criminal complaint concerning an insurance company.
2. The complaint (out-of-court) procedure (for instance, item 1 of art. 16.1 of the Law on the CMTPL prescribes that the out-of-court procedure is mandatory) is to draw up a written claim to an insurance company, which must contain:
˗ the name of the insurer;
˗ the name and address of the insurant (disadvantaged);
˗ the number of the insurance contract and its date, the original or verified copy of the insurance certificate;
˗ exact matter of violation of the insurant rights;
˗ the principal requirements with confirmation of their legal propriety;
˗ the cure period.
(See item 5.1 of the Russian Federation Central Bank Regulation Clause of 19.09.2014 № 431-P "On the rules of compulsory motor TPL insurance")
Usually the claim is made in two copies, one of which is transmitted to the official representative of the insurance company, the second – with the representative`s signature of acceptance of the claim – remains with the insurant.
3. An appeal to the court/arbitration court against an insurance company (art. 3 of the Civil Procedure Court of the RF, art. 4 of the Arbitration Procedure Code of the RF). This method is the most effective and it allows, in case of successful outcome of the case, not only to settle the dispute, but also to recover damages from an insurance company (art. 15 of the CC of the RF) or a penalty (art. 394 of the CC of the RF), for example, a pecuniary punishment in case of delay in fulfilling obligations or violation of the terms specified in the contract, as well as legal expenses (Ch. 7 of the CPC of the RF, Ch. 9 of the APC of the RF).
The complaint against an insurance company: its procedure and content
Before the expiration of the statute of limitations (art. 966 of the CC of the RF) established by the law – 2 years – on claims arising from the contract of property insurance, 3 years – if the requirements are also connected with the insurance contract of risk of responsibility under obligations arising as consequence of causing personnel injury or death – the insurant has the right to file a lawsuit against an insurance company. Calculation of periods of time begins from the date of when the disadvantaged (beneficiary) has known or had to know about the failure of the insurer to pay him insurance compensation or about its payment not in full (item 9, 10 of the Resolution of the Plenum of the Supreme Court of the Russian Federation of 29.01.2015 № 2 "On courts` application of the legislation on compulsory motor TPL insurance").
For a successful resolution the dispute with an insurance company in court/arbitration court, it is necessary to begin the process competently. Firstly, it is important to determine the system of courts to address regular courts or arbitration. If the injured (insurant) is a person not registered as individual entrepreneur he should appeal to the relevant court of general jurisdiction (art. 22 of the CPC of the RF), the statement of the insurer-legal entity or an individual entrepreneur shall be submitted to an arbitration court (art. 28 of the APC of the RF). However, regardless of status of the person the nature of legal relationship shall also be considered: whether they are connected with implementation of economic activity of the parties, in this case – the claim is field in an arbitration court, or have no relation to business activity, then, accordingly, the claim shall be submitted to a court of general jurisdiction.
Secondly, it is crucial to identify correctly the certain court/arbitration court for the filing of the complaint. For this purpose it is necessary to determine the cost of action: if it exceeds fifty thousand rubles – the case is refer to the district court`s jurisdiction and if the cost is below the specified amount – the claim is failed to a justice operator (art. 23, 24 of the CPC of the RF). If the case is within the jurisdiction of an arbitration court, then the insurance dispute on the first instance is resolved by the region court of the RF where it is necessary to submit the claim (art. 34 of the APC of the RF). By the general rule, a claim is submitted to arbitration court at the defendant`s location (art. 35 of the APC of the RF). According to the art. 28 of the CPC of the RF the action against an organization (in this case – against an insurance company) is submitted to the court according to the territory jurisdiction. Taking into account that activities of insurance companies are often performed through their branches, it is necessary to add that the plaintiff also has an opportunity to sue at the location of branch of the organization (item 5 of art. 36 of the APC of the RF; item 2 of art. 29 of the CPC of the RF).
According to the Resolution of the Plenum of the Supreme Court of the RF of 28.06.2012 № 17 general provisions of the Law of 07.02.1992 N 2300-1 "On Protection of Consumer`s Rights" are applied to the relations between citizens and insurance companies, and therefore jurisdiction over these disputes can also be determined by this Law (item 2 of art. 17 of the Law “On Protection of Consumer`s Rights"). The choice is made by the claimant who, in addition to the above-stated options has the right to file a lawsuit in general court / arbitration at his domicile/the place of residence; at the place of conclusion/execution of the insurance contract.
Thirdly, special attention should be paid to the content of a claim, which shall include:
˗ the name of the court/arbitration court in which it is submitted to;
˗ details of the parties;
˗ exact matter of violation of the plaintiff`s right;
˗ the requirements to the defendant confirmed with the circumstances on which they are based and the proofs of these circumstances, including legal basis of the claim in the case of arbitration proceedings;
˗ the information about getting the chance of out-of-court procedure by the plaintiff, it is is obligatory;
˗ the cost of an action;
˗ the list of the documents attached to the application (the insurance contract; the act of documents acceptance confirming the claim to the insurer for insurance compensation; refusal of the insurer in payment of an insurance compensation; the results of carried-out expertizes; receipts; the checks and other documents confirming the plaintiff`s demands).
The claim is submitted to the court/arbitration court in writing and must be signed by the claimant or his authorized representative (art. 131 of the CPC of the RF, art. 125 of the APC of the RF).
by Tatiana Smirnyagina, junior associate of BRACE Law Firm