Memorandum on partnership between NAIU & MTIBU was concluded

The Memorandum of Partnership was signed between the National Association of Insurers of Ukraine (NAIU) and the Motor (Transport) Insurance Bureau of Ukraine (MTIBU) 

The signing of the Memorandum is a continuation of the ongoing cooperation between the parties aimed at achieving the common goal of insurers – the functioning of reliable and effective compulsory civil liability insurance, which ensures the protection of consumer rights. 

Within the framework of the agreements reached under the Memorandum, the NAIU and MTIBU will exchange information on the performance of insurers, as well as take joint actions to improve the financial literacy of clients (consumers) of financial services in the segment of compulsory civil liability insurance. 

Implementing the direction of interaction on the exchange of information enshrined in the Memorandum, the NAIU will consolidate the information received from MTIBU on the performance indicators of insurers that carry out compulsory civil liability insurance, and post the results of the analysis visualized by Power BI in free access on the website. Such information will supplement the data of PRIMA information exchange, and will be able to be freely used by consumers and insurers. Obtaining this information from the Motor (Transport) Insurance Bureau of Ukraine will ensure high quality, and, therefore, reliability of information. Publication of the results of the participants’ activities is a common practice of both associations, so the consolidation of efforts in this direction will increase the availability and transparency of such information. 

It is expected that the direction of cooperation in financial literacy will be implemented in preparation for the implementation of the updated Law of Ukraine On Compulsory Insurance of Civil Liability of Owners of Land Vehicles. In view of the radical update of the regulation of this important type of insurance, the combination of expertise and experience of MTIBU and NAIU on financial literacy projects will ensure the dissemination of accessible and verified information, which will contribute to increasing financial literacy and consumer awareness. After all, the protection of clients’ rights from the best business practices becomes the task of insurers.

Interview with Denis Yastreb for Banker.ua

The recovery of Ukraine in the post-war period is one of the most critical issues that everyone is already addressing today. Everyone, from the State, President, parliamentarians, government officials, regulators, entrepreneurs, and our international friends and partners, plays a part. Our soldiers – both young men and women – give us confidence every day and bring us closer to victory over the enemy. Therefore, our main task is to secure the future of Ukraine.

The insurance industry is steadily maintaining its structure and meeting the needs of the population and businesses for insurance. Today, we can assert positive trends in the recovery of the insurance sector.

In the first half of 2023, the insurance market of Ukraine continues to actively recover. Premiums for risk insurance amounted to 19.1 billion UAH, which is 24.0% more than in the same period in 2022. However, this result is still 13.5% worse than in the first half of the “pre-war” 2021.

Analyzing the insurance market data, a significant increase in premiums and concluded insurance contracts for property insurance types is noticeable. For example, in property insurance, premiums from individuals increased by 154.8 million UAH compared to the first half of 2022. The likely reason for this is the desire of property owners, including apartments, houses, and other real estate, to protect themselves from risks, including war-related risks. Insurers’ offers for property insurance, including war-related risks, have also contributed to this trend, and it has been observed since the fall of 2022.

One of the insurance sectors demonstrating one of the largest growth rates is cargo insurance (+263.6 million UAH), which, in our opinion, reflects the recovery of business activity among private enterprises, logistics within Ukraine, and beyond its borders.

Traditional participants of the National Association of Insurers (NAI) are also recovering more actively. In the first half of 2023, the total collected premiums amounted to 13.8 billion UAH, which is 27.7% more than in the same period in 2022, and this figure already surpasses the pre-war 6 months of 2021.

Insurance payouts for risk types of insurance in the first half of 2023 amounted to 7.2 billion UAH, of which 5.5 billion UAH were paid by NAI members.

Insurance payouts increased by 28.1% compared to the first half of 2022, but the market has not yet reached pre-war levels.

Insurance reserves continue to grow and, as of June 30, 2023, amount to 24.3 billion UAH, which is nearly 14% higher than the previous year’s figures. The growth of insurance reserves indicates that insurance payouts will continue to increase in the future because insurance reserves reflect the volume of insurers’ future obligations.

The life insurance market, unlike risk insurance, is recovering at a slower pace but is showing a tendency for growth. Premiums for life insurance in the first half of 2023 increased by 2.4 million UAH compared to the same period in 2022.

Insurance payouts are growing at a slightly faster rate, and as of the end of the first half of 2023, they amounted to 576.2 million UAH (289.3 million UAH in the second quarter of 2023). This is once again the highest quarterly insurance payout figure in over 2 years, including the pre-war year of 2021.

As of June 30, 2023, life insurance reserves have increased and amount to 18.1 billion UAH, with assets totaling 22.1 billion UAH, indicating the financial stability of life insurers.

In addition, insurers paid 855.7 million UAH in profit tax to the budget in the first six months of 2023.

These are the results of insurers’ work during challenging times, demonstrating resilience, adaptability, and development. Continuous work and the improvement of customer service quality have become possible due to the financial stability of insurers and the implementation of advanced technologies in insurance. A consistent trend in the insurance industry in recent years is the active development of remote services in insurance, from contract signing to remote claims settlement. According to a survey among NAIU insurers in 2023, for the main lines of business (motor, property insurance, personal insurance), the share of electronic contracts (concluded remotely) is 66.5% of the total number of insurance contracts. The growth of electronic insurance contracts is a sustainable trend in the insurance market.

The positive trends in the insurance industry create a solid foundation for recovery. The next stage, which should also contribute to the recovery and development of the insurance sector, is the implementation of European directives as part of the insurance reform. Insurers have already begun active work to meet the requirements of the new Ukrainian Law on Insurance, which will come into effect on January 1, 2024. Enhanced or updated requirements in the areas of consumer rights protection, insurance product implementation, information disclosure, financial stability, internal management structure, and control are just a partial list of tasks for insurers in the first half of 2024. Today, the National Bank of Ukraine continues to actively develop the regulatory framework necessary for the implementation of the insurance reform. The coordinated interaction between the regulator and insurers, even in the conditions of russia’s full-scale invasion, instills confidence in the successful implementation of the mentioned reform.

Another issue that needs to be addressed is the issue of insuring military risks. This is a widely discussed issue in various forums and sectors. Citizens require financial protection due to injury, loss, or damage to property. Businesses need financial protection for their workforces and material-technical bases, and investors need protection for their investments.

Attracting significant investments into the Ukrainian economy is a necessary precondition for Ukraine’s recovery in the post-war years. Protecting investments is one of the key issues being addressed today by the government, our international partners, who are also working on creating mechanisms to guarantee investor protection. Today, insurers are ready to cover losses resulting from the use of war instruments within property, transportation, cargo, and personal insurance. With the expansion of reinsurance programs, the capabilities of Ukrainian insurers will significantly increase. However, insurance in conflict zones, areas with active combat, and occupied territories will be inaccessible.

Insurance of investments for local and foreign investors will only be available under the conditions of creating special guarantee institutions or procedures.

Insurers results for 9 months

Insurance exchange participants of PDMA have committed to disclosing their metrics every month, and the NAIU office is processing them promptly for the needs of the participants and all interested parties.

PDMA has already collected, consolidated, verified, and visualized the results of its participants’ work for the first 9 months of this year. As promised earlier, NAIU already has the data for all our insurers and insurance company ratings for the first 9 months of 2023.

These insurers diligently account for their metrics and voluntarily share them with the public. They have decided to report to their clients, partners, and even competitors. They disclose their performance metrics regardless of whether they are market leaders today. PDMA participants are insurers who demonstrate transparency not only formally.

We invite you to review the results for the first 9 months at https://www.nasu.com.ua.

Please note that the presented metrics and ratings, compiled based on these results, contain data exclusively for insurers participating in the PDMA project. The disclosure of information is done voluntarily by PDMA participants and is considered the best practice in the insurance market of Ukraine for disclosing information about the financial condition and performance of insurers. We expect to see the results of 9 months of the insurance market in November after the NBU publishes its results.

We will keep you informed of any updates, and you can independently explore metrics, trends, dynamics, make comparisons, and make informed choices here https://www.nasu.com.ua/indicator/

Strategic analysis and planning

Strategic analysis and planning. These are periodic meetings, strategic sessions of participants, which are held within the framework of NAIU and are dedicated to forecasting the state of the risk insurance market and vectors of its development.

Thus, another strategic session devoted to forecasting the risk insurance market for the end of 2023 was held recently.
At such meetings, we usually talk about the current state of the insurance market and discuss factors that may affect certain types of insurance. The trends of 2022 and 2023 were taken into account as a basis for forecasting, with distribution into the retail and corporate segments.

So, let us hasten to share with you the results of our vision.

According to the results of the first half of 2023, the insurance market grew by almost 25%, so the tendency towards gradual recovery is maintained.

 

In recent years, the first 5 places have traditionally been occupied by motor types of insurance (Motor Casco, OMTPL and Green Card), health insurance and property types.

We suggest to dwell on these species in more detail.

Therefore, Mototr Casco is forecast at the level of +20% both in terms of premiums and insurance contracts. In our opinion, this indicator is due to the revitalization of the new car sales market, as well as the growing demand and expansion of offers for the so-called “mini casco” programs.

When discussing mandatory motor types, such as OMTPL for the Green Card, taking into account the growing average premium, which is directly related to inflationary processes in Ukraine, we expect a growth of +20% for OMTPL, and for the Green Card it is closer to +30%.

We associate the growth of the Green Card not only with inflation, but also with a possible price increase, due to the fact that insurers have to adjust prices taking into account the growth of the average payment due to the change in the geography of our citizens’ stay in Europe. At the same time, we cautiously predict a decrease in the number of signed contracts within 5%.

Regarding health insurance, it is impossible to unequivocally indicate certain factors, except for inflation, and despite the slight growth (+4.6%), health insurance is confidently included in the TOP 5 types. This certainly reflects the ongoing process of relocation of enterprises from temporarily occupied territories, restoration of insurance for collectives, and therefore, in general, we expect an increase in the range of 11%.

As for property insurance, we see the preservation of trends in the growth of premiums from individuals, and therefore with the growing demand for such insurance (including from war risks) and the appearance of new offers, insurance programs on the market, we expect further growth within the 20- 25% We would like to remind you that according to the results of the first half of 2023, the receipt of premiums from individuals increased by 57% (+154 million UAH).

Separately, we offer to stop at cargo insurance. The NAIU community expects an increase in the same limits (20-25%) as property types, taking into account a certain recovery, and in some places an increase in exports of some product groups by more than 100% (compared to the first half of 2022). However, in the corporate segment, we remain less optimistic, because the recovery of the “global programs” of insurance is not happening as quickly as we would like, caused in our opinion by the security factor and the lack of full-fledged reinsurance in war conditions.

Unfortunately, with the impact of the war, we have negative consequences and trends in the insurance market for such types as aviation insurance, travel insurance, and therefore we predict a slow recovery and closely monitor changes in the market.

Of course, this forecast is not accurate or absolutely correct, but it can definitely serve as a certain signpost and a direction in which you can orient yourself, because the NAIU community unites insurers of different types of business and each of the participants is an expert.

Those who want to see our forecast in numbers are invited to visit our website.

The NAIU continues the path to a solvent, stable, competitve insurance market in Ukraine with proper protection of the rights of consumers of insurance services

And this is relevant not only for clients, but also for the insurers themselves.
We take another step on our way and present an overview of the new law of Ukraine “On Insurance”, the preparation and implementation of which is the task of this and the next years for the market and the NBU.

NAIU members received an overview of this Law from the Association Office shortly after its adoption, at the beginning of 2022.
Currently, we offer everyone to participate in learning and research in a convenient format on the section of our website osvita.nasu.com.ua.
Please note that the proposed review is exclusively informative and is the result of the NAIU Office’s own processing of the norms of the new Law of Ukraine “On Insurance”. It aims to provide insurers with methodological assistance in preparing for the implementation of the requirements of the new Law of Ukraine “On Insurance” and is exclusively an auxiliary material designed to facilitate preparation.

Simplifying financial monitoring without losing vigilance

The National Association of Insurers continues the joint search with stakeholders for ways to simplify financial monitoring by insurers while maintaining the obligation to achieve its objectives.

Currently, NAIU is grateful for the NBU’s support for the initiative to increase the limits on the volume of financial transactions carried out by PEP through the institution, from 200,000 UAH per quarter to 400,000 UAH per month.

The initiative of the NBU embodied in the NBU Resolution will ensure the same standards of financial monitoring for banking and non-banking institutions, as well as contribute to improving the efficiency of financial monitoring and reducing the burden on non-banking institutions, which will allow insurers to focus on the main aspects of their activities.

NAIU welcomes the Regulator’s understanding of the needs of insurers and will continue to jointly find ways to preserve the balance between business and the state.

The National Risk Assessment carried out by the State Financial Monitoring Service of Ukraine confirmed the classification of the most common types of insurance (CASCO, MTPL) as low-risk, which makes it possible, under favorable circumstances, to consider the issue of establishing simplified approaches to financial monitoring of certain types of insurance, and, following the FATF Recommendations, to exclude risk insurance activities in the future on the types of activities of financial institutions that are subject to FATF requirements.

Specialists of the members of the Association, who are part of the Financial Monitoring Committee of NAIU, thanks to constant professional development and exchange of experience in the Association, currently make up the vanguard of finmon in insurance, which gives confidence in the necessity of achieving the best results together.

The NAIU initiative for high-quality and affordable medical care for people with the involvement of insurers

Today’s events are making significant adjustments to everyone’s activities. However, some areas of the Association’s activity are unchanged and only intensify in the conditions of surrounding uncertainty. Currently, the focus is on expert work, building workable models that change the market will work for a long time, attention to areas that are both socially important and promising for insurers.

The direction of public-private partnership in health insurance fully corresponds to these parameters.
Issues related to health insurance, health care financing reform and the introduction of electronic mechanisms, the Universal Medical Coverage system, and the development of electronic health care are priorities in the Association’s activities throughout its existence, because according to the results of 2022, NAIU members hold 83% of the market of voluntary of medical insurance of Ukraine, and according to the results of 6 months of 2023 – 88.9%.

In this regard, NAIU welcomes the efforts of the Ministry of Health regarding health insurance and the recently adopted Roadmap for the implementation of health insurance, supports the arguments and steps defined in it.

We are sure that cooperation between business and the State can have a positive effect on the penetration and lowering of the cost of health insurance. Also, such interaction can partially solve the problem of “out-of-pocket” costs for health care, will ensure the involvement of the private sector as a full member of the health care system, the involvement of additional funding for both complementary and additional health care, the development of the electronic health care system . Insurers, within the framework of the settlement of insurance cases, can also provide control over the activities of health care institutions in terms of the use of funding, as well as the rational and adequate appointment of treatment to patients.

We are convinced that a necessary and significant contribution to the initiated reform will be the joint efforts of the Committee on National Health, Medical Aid and Medical Insurance of the Verkhovna Rada of Ukraine, the National Bank of Ukraine and the Ministry of Health.

Among the priority concrete steps that are necessary for the implementation, in particular, of the mentioned Roadmap, and the norms laid down in the Draft Strategy for the Development of the Health Care System until 2030 from February 23, 2022, and the rights granted to insurers in the settlement of insurance cases by articles 102 and 103 of the new Law “On Insurance”, we see the need to develop a public-private partnership model in the electronic health care system, in particular, working out the options for involving insurers in the electronic health care system.

For the successful implementation of the above, NAIU appealed to the main stakeholders with the initiative of making relevant legislative changes to involve insurers in exchanging data with the electronic health care system.

Since the task of NAIU is to participate in the development and improvement of legislation in the field of financial services, including in the field of insurance, the organization and conduct of examination of acts, and the implementation of other projects that contribute to the formation and development of the insurance services market, NAIU is ready to provide its own expertise and data, develop projects and submit proposals, conduct analysis and testing of projects involving the role of insurers in the medical system of Ukraine or attracting additional funding to the medical industry, creating a unified medical information space, developing electronic health care and an electronic health care system.

NAIU does not stop and continues to implement the best practices in the insurance market and to contribute to the development of a solvent, stable, competitive insurance market in Ukraine with proper protection of the rights of consumers of insurance services.

The results of the insurance market in the first half of 2023

Thanks to the indicators of the insurance market activity for the first half of 2023 published by the NBU and the PDMA project, we are able to tell you about the main trends and changes that have taken place in the market.

Therefore, the insurance market of Ukraine continues to actively recover in the first half of 2023. Insurance premiums for risk insurance amounted to UAH 19.1 billion, which is 24.0% more than in the same period of 2022. However, this result is still worse than the first half of the “pre-war” year 2021 by 13.5%.

The following types of insurance have traditionally become the main drivers of the growth of insurance premiums of risk insurers: Motor Casco + UAH 1,442.9 million. (+ 42.6%), OMTPL Domestic + UAH 925.9 million (+ 33%) and Green card + UAH 847.8 million (+ 54%). These types of insurance account for 57% of all collected premiums for the first 6 months of 2023.

The primary cause of the increase in insurance premiums for Motor Casco and OMTPL Domestic is still inflation, which affected the increase in the cost of vehicles, auto parts and repairs in general, which affects the increase in the price of insurance.

However, we can also see an increase in the number of concluded contracts for Motor Casco by 24.3% and OMTPL Domestic by 14.9%. Among the reasons, in particular, the recovery of the new car market can be indicated. Thus, according to the information and analytical group “Auto-consulting”, the market of new cars shows quite good results in the direction of increasing sales volumes.

As for the increase in the amount of insurance premiums for the Green Card, such an increase is due, among other things, to inflationary processes in Ukraine and frequent border crossings by our citizens.

Separately, we note that analyzing the data of the insurance market, a significant increase in premiums and concluded insurance contracts for property types of insurance is noticeable. For example, for property insurance, premiums from individuals increased by UAH 154.8 million. compared to the first half of 2022. The reason for this is most likely the desire of owners of apartments, houses and other real estate to protect themselves from risks, including military risks. This is also facilitated by the offers of insurers for insurance, including war risks of real estate. And this trend has been observed since the fall of 2022.

And one more group of types of insurance that shows one of the biggest increases is cargo insurance (+263.6 million hryvnias), which, in our opinion, may reflect the recovery of business activity of private enterprises, logistics within Ukraine and beyond.

As for NAIU participants, traditionally, our participants recover more actively than other participants in the insurance market. In the first half of 2023, the amount of premiums collected amounted to 13.8 billion hryvnias, which is 27.7% more than in the same period of 2022, and this figure is already more than in the pre-war 6 months of 2021.

In general, the majority of NAIU participating insurers have already surpassed the pre-war indicators of the first half of 2021 and continue to recover steadily and already increase volumes, which is confirmed by the market share of growth drivers, namely motor types of more than 70% and more than 85% for medical insurance.

The drivers of the growth of the NAIU community, as well as the market as a whole, were motor types, which collectively increased by 2.4 billion hryvnias, and medical insurance, which showed growth of 297.9 million hryvnias.

Insurance payouts for risk types of insurance in the first half of 2023 amounted to UAH 7.2 billion, of which UAH 5.5 billion. (or 76.4%) were paid by NAIU participants.

Insurance payments increased by 28.1% compared to the first half of 2022, but the market has not yet reached pre-war levels. The largest share of insurance payments naturally falls to Motor Casco (2.2 billion hryvnias), OMTPL Domestic (1.8 billion hryvnias) and Health insurance (1.4 billion hryvnias).

Separately, we highlight that the Green card shows the largest increase in insurance payments. Thus, payments increased by more than 200%, which is due to the growth of the average payment in connection with the change in the geography of stay of our citizens.

Insurance reserves continue to grow, and as of June 30, 2023, amount to UAH 24.3 billion, which exceeds last year’s figures by almost 14%. The growth of insurance reserves means that in the following periods insurance payments will continue to grow, since insurance reserves reflect the amount of future liabilities of insurers. Currently, payments in the II quarter of 2023 are more than in the I -th.

The life insurance market, unlike risk insurance, is recovering at a slower pace, but we already have a growth trend. Thus, life insurance premiums in the first half of 2023 increased by UAH 2.4 million compared to the same period in 2022.

Insurance payments are growing at a slightly faster rate, and as of the end of the first half of 2023, amounted to UAH 576.2 million. (289.3 million UAH in the II quarter of 2023). This is again the highest rate of quarterly insurance payments in the last more than 2 years, including the pre-war year 2021.

As of June 30, 2023, the insurance reserves of life insurers increased to UAH 18.1 billion, assets to UAH 22.1 billion. The share of NAIU participants in the indicators of the life insurance market by all indicators is more than 97%.

Insurers also paid UAH 855.7 million in income tax to the budget in the first 6 months of 2023.

More detailed information on the indicators of the insurance market in the 6 months of 2023 can be found at the link: Insurance activity indicators.

Performance indicators of NAIU insurers for the first half of 2023

Summer is the time for vacations, but also the time for the results of the first half of the year.

Thanks to the PRIMA information exchange project, NAIU insurers have operational information that is updated every month. Today, thanks to PRIMA, we offer to look at the performance indicators of NASU insurers for the first half of this year, as well as to compare them with similar periods of previous years.

The numbers will speak for themselves, and we can summarize as follows: Is it difficult for insurers? – So. Were you able to? – So. Will they be able to in the future – Yes.

NAIU summer general meeting

On August 9, 2023, NAIU members gathered to discuss the current situation in the insurance market and the Association’s activities.

The head of the Association, Denys Yastreb, described the state of the market, the main trends and challenges, as well as outlined the role and activities of the Association. Prospects and further directions of actions planned to be implemented were also outlined. In particular, the Association will continue preparations for the implementation of the new Insurance Law, provide expert and methodological support to insurers, expand the PRIMA information exchange project, deepen the exchange of experience and information interaction, and provide an assessment of the impact of legislative changes for the needs of participant

NAIU participants confirmed the focus of the community’s activities on supporting the idea of ​​a transparent, solvent and stable insurance market, increasing its attractiveness for investors, diversifying products, high standards of business conduct and protection of consumer rights. Compliance with the approaches outlined in the White Book to solving market problems and implementing a new regulatory model also remains among the priority task

The composition of the NAIU Presidium was also updated, which traditionally consists of 9 people: two representatives of life insurers and seven representatives of non-life companies.

Next year, the composition of the control and management body of the Association, which is authorized to carry out general control over the activities of the NAIU, is as follows:

Olena Uljee, Uniqa – Chairman of the Presidium

Oleksii Muzychko, Universalna – Secretary of the Presidium

Andrii Peretyazhko, ARX – Member of the Presidium

Pavlo Nelha, USG – Member of the Presidium

Pavlo Tsaruk, Insurance group TAS – Member of the Presidium

Andrii Muzhuk, Alliance Ukraine – Member of the Presidium

Dmytro Hrytsuta, KNYAZHA VIENNA INSURANCE GROUP – Member of the Presidium

Nataliia Bazylevska, Grave Ukraine Life Insurance – Member of the Presidium

Andrii Vlasenko, IC TAS – Member of the Presidium