By number and amount of paid claims:

XPRIMM: How was the situation with MTPL contracts? What is the current share of electronic policies in the total number?

V.C.: As I noted above, the number of domestic MTPL contracts decreased by 20% over the year, the most significant drop was observed in the first months of the war, then the market began to gradually stabilise. At the same time, the number of electronic contracts decreased by only 2.3% (4.4 million contracts), and their share in the total number almost reached a record 62%. The share of premiums on electronic contracts has also increased and is 68%.

It is not possible to speak precisely about the share of electronic Green Card contracts at the end of last year, as they only started in September. However, at the end of the first month after their launch the share was around 60%.

XPRIMM: May you, please, tell how did claim settlement go last year? Did MTIBU record any decrease/increase in the number of settled claims in 2022? How would you assess satisfaction with the settlement procedure in 2022?

V.C.: As I noted above, in 2022, MTPL insurers settled 110.6 thousand claims of road traffic accident victims (-36.2% compared to the previous year) and paid claims of UAH 2.8bn
(-24.1%).

In general, I commend Ukrainian insurance companies for the way they have handled the settlement process during the war. Part of the credit for this goes to the COVID pandemic which has accustomed the mass consumer to all sorts of online services and forced insurers to review and digitalise their core business processes.

It is also important that insurance companies have taken a responsible stance and are prepared to fulfil their obligations to victims without citing force majeure and wartime difficulties.

The average settlement period in MTPL insurance at the end of 9M2022 has increased by 10 days, but it could not have been otherwise: some of the insurers' employees are evacuated or drafted into the army, in most cities of Ukraine there is no electricity and the Internet for hours and even days. All this creates additional difficulties which affect the speed of settlement.

Indirectly, the fact that in general the war did not lead to systemic problems with the settlement of MTPL is evidenced by the fact that the level of complaints against MTPL insurers remains very low (about 1% of the number of payments).

XPRIMM: Were there any new regulations/laws adopted last year aimed to improve MTPL insurance in Ukraine?

V.C.: On 12 January a new draft law "On MTPL insurance" was passed as a basis for the first reading. It aims to bring the Ukrainian legal framework closer to the requirements of European Parliament and Council Directive 103/2009 of 16.09.2009. Firstly, it concerns gradual increase of sums insured and cancellation of payments with so called "wear and tear" on spare parts to be replaced during repairs after a traffic accident. With the adoption of the new law, the amount of payment should fully cover the cost of repairing the car.

Also, the positive aspects of the new law include free pricing for MTPL and an accelerated payment mechanism for companies that have left the market without fully fulfilling their obligations to the victims.

On the other hand, at some points the new law imposes excessive requirements on MTPL insurers that are overstated in relation to the provisions of the Directive, such as mandatory direct settlement for all insurers or a limit of 60 days rather than the three months contained in the Directive.

MTPL insurers also have fundamental comments on the Bureau's corporate governance section.

In general, the law has long been awaited and it contains many innovations that will make the lives of all road users more protected. However, it must be understood that a significant increase in insurance amounts will definitely have an upward impact on the price of policies, so the objective in writing the law was to strike a balance between guaranteeing insurance cover regardless of the severity of the accident and the amount of damage, and an acceptable cost of insurance for the consumer.

XPRIMM: What's your forecast for the MTPL market in 2023?

V.C.: My forecast for the MTPL market will depend on two main factors:

1. The military and economic situation in the country, and consequently how many motorists there will be in Ukraine and what their financial capabilities will be
2. Legislative and regulatory policy on insurance

It is very difficult to make any predictions on the first point. Regarding regulatory issues, our Association clearly and consistently takes the position that the NBU as the regulator should, firstly, postpone the introduction of new, higher regulatory requirements for insurers until the post-war period.

Secondly, implement an action plan, which we call the "Marshall Plan for the insurance industry", which is as follows:

1. Systematic easing of standards for the war and the immediate post-war period, in particular, a reduction in asset requirements and a reduction in reserve requirements to realistic levels.
2. Waiver of penalties to companies for minor violation
3. Not trying to apply to the non-banking market the approaches used for banks without taking into account the specifics of insurance

Otherwise, next year we could see insurers leaving the market, especially those with national capital. This will reduce competition and, combined with the increase in insurance amounts under the new law, may significantly pull up prices for MTPL insurance.

With a stable economic situation and no increased regulatory pressure, I anticipate that the MTPL insurance market will start to recover next year and will show a small growth of between 5-10% in terms of the number of contracts and claims settled. In monetary terms, premiums and claims paid will increase significantly due to the effects of inflation and the weakening of the national currency.

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