XPRIMM: According to the 1H2025 results, motor insurance accounts for almost 60% of the market GWP portfolio (MTPL, Motor Hull and Green Card) and remains the key growth factor of non-life insurance. How would you describe the dynamics of motor insurance in the first half of 2025 compared to last year?

Oleksandr BERNAZIUK: The structure of the Ukrainian insurance market remains stable, with the motor insurance segment (MTPL, Green Card, and Motor Hull) accounting for 65.5% of the market. Market concentration also persists, as the TOP-10 insurers generate over 73% of total premiums.

In the first half of 2025, the Ukrainian insurance market demonstrated rapid growth of 50%, driven primarily by MTPL tariff increases following the transition to free pricing. MTPL represents one-third (33.3%) of the non-life portfolio and posted a substantial 122% increase in premiums. Motor Hull premiums rose by 22%, while Green Card business recorded a slight decline of 1.7%.

During this period, insurers collected UAH 10.457 billion (~EUR 216 million) in MTPL premiums. The average premium reached UAH 3,046.9 (~EUR 63), representing a 137.5% increase compared to the same period of 2024 (UAH 1,282.9 (~EUR 26.50)). Despite higher premiums, the number of MTPL policies fell by 6% year-on-year. This was mainly the result of market adaptation to new legislative requirements and the mass issuance of policies at the end of 2024, ahead of anticipated tariff increases, when the number of policies rose by 8.2% compared to the second half of 2023.

A key trend in the reporting period was the digitalization of MTPL. Over 99% of policies were issued electronically (3.418 million), which is 24.5% more than in 1H2024, when e- policies accounted for 74.8%. This shift is driven by regulatory requirements mandating a full transition to digital policies by 2026. Digitalization enhances transparency and control, reduces forgery risks, and helps curb fraud in the motor insurance market.

Claims payments also increased: total indemnities under domestic policies grew by 24.6% to UAH 2.885 billion (~EUR 59.6 million). The average claim paid to injured parties amounted to UAH 39,858.9 (~EUR 824), up 21.9% from the same period in 2024 (UAH 32,700 (~EUR 676)).

Another notable development is the growing popularity of the simplified claims settlement procedure via the European Accident Statement (EAS). In 1H2025, 44% of claims were settled through this channel. Overall, the number of claims handled grew by 2.2% to 72,400 cases, of which 31,800 were processed via EAS (+25.5% vs. 2024). The main driver of this trend is convenience: Ukraine’s digital EAS service allows drivers to report accidents directly via smartphone, eliminating excessive bureaucracy. Moreover, legislative changes in 2025 abolished the previous 50% cap on indemnities under the simplified procedure. As a result, claims settled via EAS increased by 68%, reaching UAH 762 million (~EUR 15.7 million) in 1H2025.

Despite the complexity of ongoing transformations, insurers have swiftly adapted their internal processes to meet new requirements, ensuring steady progress of the MTPL market toward full digitalization and improved service quality for consumers.

XPRIMM: What innovations and changes in legislation affected motor insurance development in the first half of the year?

O.B.: The year 2025 has become a turning point for the Ukrainian motor insurance market, with updated MTPL legislation fundamentally reshaping the system, aligning it with European standards, and making it fairer and more convenient for policyholders.

The most significant innovation is the introduction of free tariff setting. Insurers now determine premiums based on an individual risk assessment of each driver and vehicle, considering factors such as vehicle type, engine capacity, registration region, year of manufacture, and insurance history (bonus-malus). This reform addresses the long-standing issue of MTPL unprofitability and creates conditions for healthy competition and improved service quality.

The second milestone is digitalization. By law, insurers must fully transition to electronic MTPL policies by 2026. Electronic issuance is already widely adopted, including for international “Green Card” certificates (introduced in Ukraine in 2022).

Another critical legislative change is the principle of universal insurance coverage. All vehicles must now be insured. While previously some categories of citizens were exempt, they are now required to obtain coverage as well—albeit on preferential terms, paying 50% of the policy cost. This ensures equal quality of protection for all road users, regardless of social status.

The reform also introduced mandatory direct claims settlement (DCS). From now on, accident victims may receive compensation directly from their own insurer or from the insurer of the liable party. This mechanism has significantly enhanced customer service and halved settlement times compared to the previous process. The Motor (Transport) Insurance Bureau of Ukraine (MTIBU) has also joined the DCS system starting in 2025.

One of the most transformative changes relates to claims settlement standards. The law abolished the application of vehicle depreciation coefficients in calculating indemnities, ensuring full compensation of damages. This is particularly relevant in Ukraine, where the vehicle fleet is among the oldest in Europe. Previously, depreciation could reduce payouts by 60–70%, often leading to disputes between insurers and customers. In addition, insurers are now required to restore a damaged vehicle to its pre-accident condition by offering clients at least three partner repair shop options for a complete repair.

Finally, consumer protection has been strengthened: several legal gaps have been closed, and claim settlement deadlines have been shortened from 90 to 60 days, making the process faster and more convenient for policyholders.

While 2025 remains a transitional year—since policies concluded under the old rules are still in effect—the full impact of these reforms will become visible from 2026 onward, fostering a healthier market, greater customer trust, and higher service quality.

XPRIMM: How would you describe the situation with paid claims in motor insurance in 1H2025 and how did this segment affect the loss ratio of non-life insurers?

O.B.: In Ukraine, we observe a steady increase in claims frequency: it rose by +10% in Q3–Q4 2024 and by another +10% in Q1 2025. This directly impacted the loss ratio under MTPL policies. In 1H2023 it stood at 55.9%, rising to 67.9% by year-end; in 2024 the levels were 58.3% and 63.5%, respectively.

At the same time, in 2025 we managed to significantly reduce the underwriting loss ratio to 41.4% and the market loss ratio to 52.5%. This improvement was driven by the introduction of free tariff setting, as average premiums began to grow faster than reserves. Consequently, the annualized reserve coverage ratio slightly decreased.

We also see a clear upward trend in the average claim size. In 1H2025, it reached UAH 41,000 (~EUR 847), compared to UAH 33,000 (~EUR 682) a year earlier. This reflects inflationary pressures, higher spare parts costs, limited repair capacity, and changes in the claims settlement process. Additional drivers include devaluation expectations and logistical challenges, all of which push repair costs higher. In many cases, the actual repair costs now exceed MTPL limits.

The situation is particularly critical with new vehicles and electric cars, where even minor damage can result in repair bills of tens of thousands of hryvnias. For this reason, despite the decrease in loss ratios due to free pricing, our outlook for the next year remains cautious: loss ratios are expected to stay roughly at their current levels.

XPRIMM: In 1H2025, the number of Green Card certificates decreased compared to last year. Collected premiums also decreased, as did the number of insurance claims. What, in your opinion, influenced evolution of this insurance class in the reporting period?

O.B.: In the first half of 2025, Ukrainian vehicle owners concluded 654,038 international Green Card certificates, which is 8.74% fewer compared to the same period in 2024. Premiums also declined by 1.67%, amounting to over UAH 2.6 billion (~EUR 53.7 million). The main factor behind this decrease was the change in regulations governing the stay of vehicles with Ukrainian registration in several EU countries. As a result, many citizens were required to re-register their vehicles in their country of residence and purchase insurance directly from local insurers.

Despite the decline in the number of policies and collected premiums, the Ukrainian international motor insurance market continues to demonstrate stability. The decrease is largely attributable to external regulatory factors rather than a reduction in confidence in the system or insurers.

At the same time, a high level of claims payments has been maintained, confirming both the reliable protection of victims in cross-border accidents and the effective functioning of the international Green Card motor insurance system.

XPRIMM: In your opinion what prospects await motor insurance until the end of this year? What do you think the FY2025 results will be?

O.B.: By the end of 2025, we expect the motor insurance market to remain relatively stable; however, discussing growth without considering the broader context would be overly simplistic. Realistically, the reduction in the number of insurance contracts is not only the result of tariffs or pricing policies. We are facing a structural transformation of demand. The market is influenced by the war, large-scale migration, a decline in vehicle registrations, reduced household purchasing power, and numerous other related factors.

That is why forecasting the future of motor insurance should be based not only on the direct “premiums–claims” correlation but also on a comprehensive analysis of demographic shifts, transport regulation, and the legal environment. Currently, the market is experiencing a systemic challenge: the geography of accidents and driver behavior has changed, as well as the composition of the vehicle fleet. Some cars have been physically lost or remain unused in garages, while for certain owners, insurance has lost its relevance. These factors create a structural challenge that requires a broader approach to risk assessment.

The introduction of free pricing has allowed insurers to increase the average premium and reduce underwriting losses. However, for many drivers, the cost of a policy has already become a financial burden, and an increasing number of people risk driving without insurance, taking advantage of weak enforcement.

Thus, the outlook for the remainder of the year is a balance between two opposing trends. On the one hand, the market remains stable thanks to the adaptation of insurers and the regulator, growth in average premiums, and consistently high levels of claims payments. On the other hand, structural issues — the war, the reduction of the vehicle fleet, shifts in consumer behavior, and weak enforcement of insurance requirements — may lead to a decrease in insurance penetration.

By the end of FY2025, we expect premiums to continue growing, the market to remain liquid and responsible towards its clients, but loss ratios are unlikely to decrease significantly. The future of motor insurance will depend on the ability of both the market and the state to respond to these structural challenges and build development scenarios — from optimistic to pessimistic.

Interview conducted by Marina MAGNAVAL