In 2012 the banks' right to sell insurance products was questioned. The State Duma adopted, in the first reading, the amendments to the Law "On Arrangement of Insurance Business in the Russian Federation", which prohibit legal entities from acting as insurance agents, however the lending organizations managed to veto that legislative initiative and to retain the possibility of selling the insurance policies to their customers. As experts say it has benefited both the banks and insurers, and the end users of financial services.

In other countries there have been and are no restrictions on the banks' and insurance companies' operations at all, and the financial market players are actively and quite successfully cooperating for many years long. In this view it is useful to appeal to the practice of the western lending organizations and see how they have adjusted the cooperation process with insurance companies. Foreign experience shows that, having organized the sale of insurances, the bank will be able to expand the range of products. In its turn it raises the loyalty of customers and has a positive effect on the retail business image. Evidently, it goes about gaining the additional revenues through commission fees. Broadly speaking, the sale of policies enables to diversify the bank's business and to adapt to the changing conditions of the market quickly.

What benefits does the insurance company gain from cooperation with the bank?

The lending organization becomes an extra channel of sales enabling to enhance the number of customers. In view that in our country the people's trust in the bank's is higher than in insurance companies, and the banks' brands are as a rule (expect some rare cases) more popular than the brands of insurers, the insurance companies get an opportunity to promote their products widely through the channel that is trusted by consumers.

The western institutions' practice shows that a ticket for success for bank-insuring lies in the following factors.

1. One should take up the preparation of the insurance products themselves. They must be clear and simple. The bank's specialists and insurers create the above products as a rule jointly and through use of the best practices as well as subject to the clientele base of a specific lending entity. The product must be connected with the banking services. It shall be non-sophisticated so that both the bank's employees and the customers would be able to understand its essence quickly and to execute the purchase. In addition, one should set the price and content of the product depending on the potential target audience.

2. The correct arrangement of sales lying in the preparation of the common strategy, making up of understandings between the bank and the insurance company on distribution of obligations as for the further information support of the customer.

3. Training of the bank's staff to work with insurance products.

4. IT constituent. In this regard, a major role is played by presence of CRM system in the banks, as well as of the unified platform for communication with the insurance company.

In western countries a number of models have been formed for arrangement of the financial institution's cooperation with the insurance company. The first one is the agency model, where the bank enters into agreements with insurers and sells their products, receiving a certain commission fee. It is the simplest pattern: the lending entity (quickly and without any significant investments) is able to coordinate such work, but has no right to take part in development of the products and is not entitled to get access to the clientele bases.

In future a grander alliance between the bank and the insurer can be established. In this case the bank will be able to affect the parameters of insurance products and sales thereof. The highest stage of development is a financial supermarket (though its concept is questioned on the developed markets), but in our country we are speaking just about a certain alliance. Currently it is the agency patterns that are widely put into practice.

The bank is interested that the customer, who has borrowed a credit, especially a longterm one, will insure his life and health as well as against the risk of the major job's loss. It provides the lending entity with an additional guarantee that the credit will be repaid, and the borrower can be sure that in case of unfavourable conditions the debt to the bank will be repaid by the insurance company.

The e-chats where consumers discuss the bank products and services are overflowed with stories concerning how they were forced to buy the insurance. Customers felt that they had been toyed with and brought that negative opinion into the public. In this view it is important for financial institutions not to impose the service, not to make the borrower sign the agreement under a threat of no-disbursement of the loan. In the world of today, the customer will go complaining to the web and the bank will suffer reputation losses which will cost it much. It is essential to explain to the borrower where the benefit of insurance lies within the crediting, to make him sure that the policy should be bought. It is a serious business process requiring an extra elaboration and training of employees.

The bank's employees are liable for correct rendering of lending terms, for preventing the customer from misleads. For this purpose, the managers should have a sharp idea of the product which must be regularly checked both through reattestation, and through the Onystery customer □method. In its turn, the insurance company has to ensure the precise settlement of losses.

It is vital for the lending entity to have a relevant response upon occurrence of the insured event, otherwise the customer will not buy the policy again. Below goes the example from one of e-chats. A customer insured the bank card against loss and cybercrime risk. In a while he lost his card and came to the bank in order to have it reissued. However, the manager informed that the case was not an insured event and it was necessary to pay for the yearly service of the card again. Further examination showed that the manager was wrong. However, the amount payable was only a couple of hundreds Russian roubles, so the customer decided not to raise hell, but just refused from the insurance for the new card. He shared his offended feeling with interlocutors in social networks.

It means that it is not enough just to sell the insurance, one has to make proper settlements with the insured event so that the borrower at the given phase would not feel betrayed. As the development of market's practice shows, as competition grows the customers, especially prosperous ones, choose the bank or the insurance company by the quality of services rather than by the price. The quality of services means the emotions the consumer gets from the services or interaction with the company. If the customer feels deceived, he will never buy the same product again or generally will never go to buy from the said company.

Another area of the business development that should be focused on is the accumulative and investment insurance as well as the selection of offers for customers depending on the life stage they are in for the time being. It seems that the longterm life insurance market will be at last supported by the state. Late in May 2013 the "Vedomosti paper" informed that the Ministry of Finance had endorsed the tax privileges for those who bought the long-term life insurance policy. That policy's buyers will be able to get the tax deduction in the amount up to RUR 120 thousand per year, the insured under 18 will not pay the tax (13%) from the payments to them. Such offers can be introduced to the State Duma already during the spring session; they must take the effect and be operable since January 1, 2014. The experts as surveyed by "Vedomosti" suppose that in case the privileges are accepted the premium on new agreements may face a manifold raise in a couple of years.

It means that in our country the situation is gradually changing, and in future the insurance services will be perceived as taken for granted. Practice of the Russian banks which have already stepped towards the development of bank-insuring shows that if the joint work of lending organizations and insurance companies is carried out in terms of the legislative and ethical standards, both service providers will gain the business volumes substantially, and their customers feel satisfied. It is critical under the conditions of rough competition at the retail market of financial services.