UKRAINE: new edition of the Law "On insurance" adopted

24 November 2021 — Marina MAGNAVAL
The Verkhovna Rada of Ukraine on November 18, 2021 adopted a new version of the Law of Ukraine "On Insurance", which changes a wide range of requirements for licensing insurers, assessing their solvency and liquidity, corporate governance and risk management, termination of companies and transfer of insurance portfolio, etc., Forinsurer said.

New requirements for insurers to enter the market include a transparent ownership structure, disclosure of information on all owners of significant participation and key members of companies, when registering an insurance company provision of plans for three years. Also, introduced new requirements for corporate governance of insurers, managers of insurance companies and persons responsible for key functions must meet the qualification requirements for professional suitability and business reputation. In addition, the law establishes a differentiated approach to the minimum charter capital of insurers: UAH 32 million for non-life insurers and UAH 48 million for life insurance companies.

The new solvency requirements for insurers establish two different approaches to solvency - a simplified one (Solvency I) and a basic one (Solvency II). During the first three years after the introduction of the new law, all insurers will have to meet the solvency requirements under the simplified approach.

Flexible licensing approaches require insurance companies to obtain only one license instead of several for each separate type of service. The National Bank will move from licensing certain types of insurance to licensing classes. The law provides for 5 classes of life insurance and 18 classes of non-life insurance.

Requirements for insurance intermediaries provide for the mandatory registration of intermediaries in a single register, their training. It also sets requirements for their level of competence, avoiding conflicts of interest, expanding the information that is disclosed to consumers.

Transparent termination conditions for insurers establish a clear termination mechanism. Exit from the market can be both voluntary (due to reorganization, transfer of the insurance portfolio, liquidation, etc.), and compulsory. The law clearly established the grounds for classifying an insurance company as insolvent and for compulsory revocation of a license. It is also possible to introduce a temporary administration to an insurance company to protect the interests of clients.

The new edition of the Law "On Insurance" comes into force the next day after official publication and is fully enacted two years later.

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