Leaders of the insurance market of Ukraine in terms of premiums collected in January-June 2024 were insurance companies SG “TAS” (UAH 2.057bn), “Unica” (UAH 2.033bn), “ARKS” (UAH 1.955bn), “INGO” (UAH 1.527bn) and “Ukrainian Insurance Group” (UAH 1.409bn), according to the website of NASU.
It is noted that compared to 5M. 2024, IC “Unica” rose from the third position to the second, and IC “ARKS” took its place.
In the top-5 in the market of compulsory insurance of civil liability by collected premiums there have been no changes and following the results of six months of this year the leaders are SG “TAS” (UAH 642,3 mln), “Oranta” (UAH 605,1 mln), “Knyazha VIG” (UAH 473 mln), “ROM” (UAH 304,1 mln) and “VUSO” (UAH 201,6 mln).
The leaders in the market of “Green Card” on collected premiums for the reporting period are “TAS” (UAH 628,3 mln), “USG” (UAH 303,1 mln), “Knyazha VIG” (UAH 317,6 mln), “ROM” (UAH 258,6 mln) and “Oranta” (UAH 173,2 mln) (earlier the fifth position was occupied by IC “INGO”).
There have been no changes in the CASCO market, it is headed, as before, by IC “ARKS” (UAH 1,040 billion), “Arsenal Insurance” (UAH 865 million), “Unica” (UAH 533,7 million), “VUSO” (UAH 448,6 million) and “USG” (UAH 417,6 million).
At the same time among the leaders in voluntary health insurance there have been slight changes in the leadership, as before the top 5 in this segment is headed by IC “Unica” (UAH 907,8 mln), IC “Universalna” has risen from the fourth position to the second (UAH 386 mln), followed by IC “INGO” (UAH 342,5 mln), “ARKS” (UAH 277,7 mln), “VUSO” (UAH 270,3 mln).
According to PRIMA data, there were no changes in the leaders of the life insurance market in the first half of 2024. As before, the first position is occupied by IC “MetLife” (UAH 1,275 bln), IC “TAS” (UAH 330 mln), “Grave Life” (UAH 257,7 mln), “Unica Life” (UAH 203,5 mln) and “ROM Life” (UAH 186,7 mln).
As reported, as of the end of June 2024, 78 risk insurers operate in the insurance market of Ukraine, 12 specialize in life insurance, one – with a special status (“Export Credit Agency”, ECA).
The National Bank of Ukraine (NBU) has developed a regulation on the transition of the Ukrainian insurance market to European standards to bring insurers’ activities in line with Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the establishment and conduct of insurance and reinsurance activities (Solvency II).
According to the NBU’s website, the regulation on establishing requirements for insurer solvency and investment activities has been developed and proposed for public discussion and consists of two main blocks.
The first block includes requirements for ensuring solvency, in particular, establishes the procedure for calculating regulatory capital and eligible regulatory capital, taking into account restrictions on the composition and structure of eligible assets for their calculation, as well as the procedure for calculating solvency capital. Thus, the minimum capital under the simplified approach for certain categories of insurers, in particular, life insurers and non-life insurers with significant volumes of activities, is set at the level of at least UAH 48 million, and for others – UAH 32 million.
Insurers will apply a simplified approach to calculating solvency capital based on insurance premiums, insurance claims, technical reserves, etc. until 2027.
The second block includes requirements for the insurer’s investment activities, including assets to cover technical reserves and restrictions on investment.
The NBU notes that the regulation will come into force on January 1, 2024, and will provide for a six-month period for insurers to bring their activities in line with the new requirements. After that date, the NBU will not apply any enforcement actions to insurers for violating solvency requirements if they implement their recovery and/or financing plans.
Comments and suggestions on the draft are accepted until December 18, 2023.
The EU Solvency II Directive primarily concerns the amount of capital that insurance companies must hold to reduce the risk of insolvency. The next steps to strengthen the solvency requirements for insurers in Ukraine, according to this directive, will be to determine the procedure for assessing certain categories of eligible assets and to introduce requirements for calculating solvency capital and minimum capital under the basic approach for certain categories of insurers from 2027.
Ukraine, the European Commission, Switzerland, Norway, the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) signed a Statement of Intent to restart the private insurance market to support Ukraine’s sustainability and recovery, Prime Minister Denis Schmigal said
“Rebuilding Ukraine will be the largest recovery project since World War II. We are involving all of our international partners in this process, as well as the private sector. It will be the engine of Ukraine’s reconstruction. Today on the margins of the conference in London, together with the European Commission, Switzerland, Norway, the EIB and the EBRD signed a Statement of Intent to restart the private insurance market to support the sustainability and recovery of Ukraine,” Shmygal wrote in the Telegram channel.
According to him, it will kick-start business insurance against military risks when investing in Ukraine.
“At the expense of donor support will be able to attract Ukrainian and international insurance and reinsurance companies again. Such an important step will help in the return of foreign investment in Ukraine. It means economic recovery, jobs and taxes to support our army,” he concluded.
Five risk insurers and one insurance broker left the Ukrainian insurance market in May, according to the website of the National Bank of Ukraine (NBU).
According to the NBU, as of May 31, 2023, 104 non-life insurers (109 in April) and 12 life insurers (number has not changed), one insurer with special status (ECA) and 56 insurance brokers worked in the non-bank market (57 in April).
Besides, two insurers had part of their licenses revoked voluntarily (on the basis of applications submitted by the companies), and one insurer had all of its licenses revoked.
In May, the National Bank received 323 requests from non-banking market participants for registration and licensing activities, 80 of them from the insurers.
As it was reported, in May the National Bank of Ukraine excluded “IC Unipolis” PJSC and “IC Speir” ALC (both in Kiev) and “IC Rik-Avtogarant” ALC (Lviv) from the State register of financial institutions due to the decision on the cancellation of all existing licenses. Also JSC “PROSTO-insurance” (Kiev) has been excluded due to cancellation of all previously available licenses due to non-compliance of insurer ownership structure with legislative requirements, and UJSIC “ASKA” (Zaporozhye) due to completion of accession to IC “VUSO”.
Besides, according to its application Insurance Advisors LLC is excluded from the State register of insurance and reinsurance brokers.
26 risk insurers and one life insurer will leave the insurance market of Ukraine in 2022, according to a review of the non-banking financial sector, published on the website of the National Bank of Ukraine (NBU).
According to the NBU, in the fourth quarter of 2022 the volume of gross premiums of life insurance companies increased by 9%, while the risk insurance, on the contrary, decreased by 8%.
In general in 2022 the volume of premiums on life insurance decreased by 17%, and risk insurance – by 21%. At the same time, insurers’ payouts were almost unchanged, for the quarter. At the same time for the year for life insurance premiums increased by 7%, risk insurance – decreased by almost a third.
The share of premiums on motor insurance (Casco, CMTPL and Green Card) in 2022 increased by 10 p.p. – to 49%. In particular, the volume of premiums “Green Card” more than doubled compared to the previous year, and payments almost by a third. At the same time, premiums for property insurance and insurance of financial risks more than halved, and their payments decreased by 62%.
The volume of gross premiums ceded in reinsurance, for the year decreased by more than two times, and reimbursements – almost 60%. For the fourth quarter, premiums to reinsurers decreased by 36%, and reimbursements – by 40%.
The NBU notes that the total amount of reserves for losses of insurers remained almost unchanged for the quarter, but had different dynamics in relation to separate types of insurance: for voluntary types the reserves for losses slightly decreased by 7% in comparison with the third quarter; for compulsory types – increased by 10% in comparison with the previous quarter. In annual terms, reserves for losses on both voluntary and compulsory types of insurance increased by 36%.
Investment income of risk insurers in 2022 increased almost one and a half times compared with the previous year. Most of this income was interest on bank deposits. However, the growth of investment income could not cover the increase in operating expenses. The operating efficiency ratio increased to 88%.
In the fourth quarter of last year, one of the life insurance market leaders reclassified investment income, resulting in a significant decrease. Excluding this company’s data, life insurers’ investment income increased 30% year-over-year and 12% quarter-over-quarter. Deposit income was up 36% to the previous quarter, while income from investments in GSEs remained flat.
Risk and life insurers ended the fourth quarter with a small loss, but both groups were fairly profitable for the year.
Return on equity for risk insurers was 15%, and for life insurers – 13%.
For the fourth quarter of 2022, life insurers’ assets increased 3%, and for all of 2022, they increased 18%. Assets of risk insurers declined slightly over the quarter, but rose 6% for the full year.
As of January 1, 2023, seven insurers had violated at least one of the solvency and capital adequacy and transaction risk ratios.
Although 2022 was a difficult year for the whole of Ukraine and for the insurance industry, it did not become a verdict – the industry survived, insurance did not disappear, insurers generally have a slight decline by 2021, and some even have a very good increase.
This was written by Vyacheslav Havrylenko, CEO of ARX Life Insurance Company, Deputy Chairman of the Board of ARX, in a column published by Interfax-Ukraine.
Risk insurance market
In numbers, in 2022, the market fell by about 11% compared to the previous year, which is very good in a time of war. If we look at the market without the Green Card, the drop will be 17%, which is also a satisfactory result. These are preliminary data based on information from members of the National Insurance Association of Ukraine.
The Green Card has become the leader in insurance, with growth of 152% (due to the massive departure of Ukrainians abroad, especially at the beginning of the war). The volume of premiums was stable, with only a slight drop of 3%. Health insurance fell by 16%. The biggest drop was in hull insurance – 20% year-on-year.
Travel insurance grew by almost 42%. Property insurance (in the corporate segment) was also a surprise – our premiums fell by only 25%, although we did not expect such a moderate drop. One of the reasons is that global insurance programs have largely disappeared and customers have turned to local insurers. The market benefited from this.
If we describe the behavior of customers, we can say that although the demand has dropped (due to financial difficulties, the inability to insure at all in parts of Ukraine, the catastrophic drop in new car sales and the drop in car loans), it has not disappeared at all – customers felt the need for insurance. Ordinary insured events have not disappeared, and insurers compensate customers for their losses. In 2022, ARX paid UAH 826 million in indemnities, and we continue to make payments under the contracts of the previous year.
Life insurance
Regarding the life market, we can state that, just like in non-life, the market withstood in 2022. At the same time, the total premiums of all life companies in general showed a 14% decrease compared to the previous year. Some companies experienced a bigger drop, but some showed a slight increase. The composition of the main players has not changed over the past year.
While overall there was a moderate drop in payment volumes, in the non-lending individual insurance segment, we even grew by 5% compared to 2021.
Corporate insurance showed an increase of 10%. As for clients, our portfolio amounted to more than 430 thousand clients in 2022. Unfortunately, this is a clear decline in the total number of clients compared to the previous year. Therefore, we are focused on retaining customers and focus on reliable and high-quality service – we take care of our partners and customers every day.
We ended last year with a profit of UAH 25 million, which is more than 2 times higher than in 2021. As for payments, we collected almost UAH 270 million, which, unfortunately, means a 16% decrease in payments in general compared to the total fees of the previous year.
But overall, we are optimistic about the future. For example, in 2022, we launched a new product called “Armor Protection”, which is accident insurance that includes military risks. So it’s definitely not time to stop.
What to expect in 2023
Regarding plans for 2023, it is clear that it is impossible to predict how the situation with the war and the economy will develop (although we are optimistic), but we must plan our activities. So we will try to achieve a year-on-year growth of 22% to 23%.
Of course, these are average figures, and they will differ for different types of insurance, sales channels and regions of Ukraine. Perhaps this is a somewhat ambitious plan, but we see it as such. We will see what happens in reality; in January we fulfilled our plan.
We do not foresee a significant increase in new car sales this year and do not forecast a significant increase in the share of car loans in these sales. Therefore, we continue to focus our sales on car insurance without loans, including used car insurance – it is clear that these will be not only full hull insurance programs. In particular, we continue to actively develop online sales and hybrid sales (transfer of online leads to sales offices and call centers). We are also actively working with cross-selling to MTPL customers, but the main resource for many companies will be the renewal and retention of their own base of existing customers.
Therefore, we will continue to focus on high quality of service, development of additional in-house services, and will prove our main advantage – true fundamental reliability.
Against the backdrop of the war, falling demand, and financial difficulties, the NBU continues its systematic and systematic work to oversee companies’ compliance with financial standards. So, all together, all insurers are pushing all insurers to work profitably (otherwise there will be a lack of capital) and form reserves with the proper assets, but at the same time constantly improve the quality of their services and not try to achieve profitability by “cutting” justified payments to customers; continue to move further into digitalization, but reduce operating costs.
Undoubtedly, some companies will leave the market due to the factors described above, but almost all large companies with Ukrainian capital and all international companies will remain in the market. In general, customers will benefit because the reliability of insurers and the quality of their services are increasing.
