2021 has become a year of transformations for the insurance business, legislative changes, and certain challenges after transfer of the regulation over the market of non-bank financial services to the NBU (National Bank of Ukraine) in 2020.
Exit of insolvent insurers from the market continues: as of September 15, 2021, 169 insurers operate in the insurance market, 17 of which are life insurance companies. Since July 2020, the insurance sector has decreased by 46 insurers, or 21%. Of these, only 8 companies were forcibly withdrawn from the market, the rest of the insurers, who left, suspended their licenses on their own application, as explained by Iryna SIRENKO, head of the insurance market supervision department of the non-bank financial services market supervision department of the National Bank of Ukraine.
Despite the decrease in the number of insurers, all key market indicators saw an increase. The Ukrainian insurance market returned to normal business activity and adapted to work under quarantine conditions. Total GWP in 1H2021 increased by 18% y-o-y and amounted to UAH 24.78 billion. Paid claims for the first 6 months of 2021 increased by 20%, and in non-life segment - by 46.6%. The paid claims ratio was 35%. Insurance reserves in July 2021 amounted to UAH 35 billion. Eligible assets - UAH 51.5 billion.
Concentration of the insurance market during the first half of 2021 did not undergo significant changes compared to last year: 90% of GWP in 1H were generated by 60 insurers (50 non-life insurers and 10 life insurers). The life insurance market is highly concentrated - 5 insurance companies account for 90.6% of life insurance reserves.
There are also qualitative changes in relation to the assets of the insurance market, in particular, a reduction in the shortage of eligible assets over the period. 87% of insurers adhere to solvency and financial regulations.
The development strategies of the financial sector of Ukraine until 2025 have a considerable emphasis on the development of markets for non-banking financial services. Among the priorities of the National Bank are increasing penetration of non-bank financial and insurance services, creating opportunities for their remote provision, introducing European standards of activity, as well as creating a system of guaranteeing deposits for members of credit unions and life insurance payments. By 2025, it is planned to achieve insurance penetration at the level of at least 2% of GDP.
Among the tasks there was also mentioned an increase in the share of life insurance in the total net GWP volume (up to 20% in 2025 from 12% today) and an increase in the share of online MTPL contracts (up to 100% from about 50% today). The next priority is the requirements for insurance companies to protect consumer rights, introduction of which is planned for 2022.
"The priority of the National Bank is to ensure transparency in the non-banking market. This can be done by introducing updated licensing requirements for market participants, raising corporate governance standards, and improving methodological support. The initial stage of a long and challenging way of transforming the market of non-banking financial services and bringing it closer to world standards has been passed. However, there is still a lot of work ahead", said Sergei NIKOLAYCHUK, Chairman of the NBU.
*at the following exchange rate:
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