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.
