The State Duma has proposed tightening licensing and merger regulations for the insurance industry, which comprises more than 700 companies.
The industry was hard hit last year when car sales slumped more than 50 percent, reducing demand for auto insurance policies, which are the industry's major revenue source.
The local insurance market remains fragmented, with total assets of the top 10 insurers worth just 400 billion rubles ($13.6 billion) as of June 30, 2009.
Vladislav Reznik, who heads the Duma's committee for financial markets, has proposed requiring companies to inform a regulator when purchasing up to 1 percent of an insurer.
He also wants to require buyers to obtain regulatory approval prior to increasing their stakes above the 20 percent threshold.
The same rules have already been implemented in the banking sector.
"The proposed amendments will help to tackle the current problems of the insurance sector," Reznik said in an e-mailed statement.
The regulator would also have the right to revoke an insurer's license should it provide erroneous financial data or prove to be financially unstable.
The amendments have yet to be approved by the Duma.
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