UKRAINE: Financial service market watchdog decided to put order in the market

26 June 2014 — Daniela GHETU
ucraina2"By the end of 2014, 7-10% of the Ukrainian insurance companies, involved in doubtful transactions via reinsurance, will leave the market," the Head of the National Commission for Financial Service Markets Regulation of Ukraine, Maksym POLIAKOV, quoted by Interfax. He also said that, currently, only 20% of the market capital is represented by real funds, while 50% are bills of exchange and shares.

The Ukrainian market watchdog has divided the 83 actively operating companies on the insurance market into three risk groups: high risk - 17 companies with a shortage of funds to fulfill their liabilities, medium risk - 16 financially stable companies against which claims of clients arrive and low risk - 50 stably operating insurers, POLIAKOV said.

He explained that the regulator picked out 18 insurers that were involved in doubtful transactions via reinsurance after the results of their operation in 2013 and in the first quarter of 2014. Furthermore, the licenses of the insurance companies RAIP, SIAYVO, PROGRESS Fund, SILUM, EUROSTANDARD and VPEVNENIST-BEZPEKA have been suspended, but the first three of them had challenged the decision of the regulator in court.

POLIAKOV said that the commission had informed SBU and the Prosecutor General's Office about the operations it had uncovered. In addition, the commission plans to initiate the legalization of responsibility of shareholders in insurance companies for deliberate withdrawal of capital and destruction of insurance companies.

The commission plans to pay special attention to the insurance companies owned by the "family" or the associates of former President Viktor YANUKOVYCH, as Serhiy KURCHENKO, Vitaliy ZAKHARCHENKO and Serhiy ARBUZOV. For the time being, control operations are conducted and in the near term the licenses of some of them will probably be suspended, POLIAKOV said.

He also said that now DOMINANTA and UKRAINIAN Insurance House are being checked and other companies, belonging to the KREMEN and STATUS groups will follow.

According the Commission's official, within one month (by July 15) temporary administrations would be introduced at three large insurance companies operating on the OSAGO (mandatory MTPL) market, from which shareholders started removing capital, according to the information of the regulator. The shareholders do not plan to develop them.

With the purpose of the permanent monitoring the financial state of insurance companies the commission has introduced practice of interim inquiry of information on the operation of insurers between official reporting periods. Also, the commission pays special attention to claims for OSAGO's clients, and voluntary medical insurance and life insurance as these are social types of insurance.

In 2014, the regulator conducted 28 scheduled and 48 unannounced checks. Licenses were suspended at 14 companies, 24 licenses were canceled and five companies were removed from the state register of financial organizations, POLIAKOV said.

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