The Ukrainian insurance market this year could cut the volume of insurance premiums collected by 20-30% compared with 2019 due to the coronavirus disease (COVID-19) pandemic and the economic situation, according to insurers polled by Interfax-Ukraine.
“We have made three scenarios: from optimistic to pessimistic. All three scenarios provide for deviation from planned sales plans. Under an optimistic scenario, we (and possibly the entire market) will reach last year’s sales figures (around 5%); the average scenario provides for a 15% drop compared to last year; the pessimistic scenario can mean a drop of 30% or higher for the market compared to last year. We are optimistic,” Deputy Board Chairman of ARX (formerly AXA Insurance) Viacheslav Havrylenko said.
The forecast for a decrease in market volumes by 20-30% was made in the insurance companies Guardian and Euroins Ukraine. At the same time, according to Euroins Ukraine, the crisis will continue in 2021.
At the same time, the TAS Insurance Group said that the insurance market after lockdown should recover in a couple of months. Two factors can prevent this: a sharp jump in the hryvnia exchange rate to the U.S. dollar or significant problems with the income of the population due to the long lockdown and the fact that many were forced to go on vacation at their own expense.
“If there are no serious shocks, we see no reason not to cope with the tasks that we have set for ourselves this year. We, as a company focused on retail sales, are not so dependent on the corporate sector, which will suffer the most in the crisis Therefore, at the moment I don’t see the need to make any considerable adjustments to our plans, but time will tell,”, Board Chairman of TAS insurance group Pavlo Tsaruk said.
According to UNIQA insurance company, it all depends on the duration of the lockdown and changes in its regime. With the weakening of quarantine from the end of April and the gradual exit from it during May, the impact will be, but a significant drop will probably be avoided. Most stable and capitalized insurers must cope with these challenges. Therefore, now customers should pay close attention to the reliability, stability and financial viability of the insurer, the company said.
Asked what companies intend to do in order to minimize possible losses in the business, most insurers said that they intend to optimize processes and costs that are not necessary now, to work on diversifying the portfolio, and not to stop providing a high level of service for all types insurance, continue digitalizing business processes, enhancing responsibility and discipline.
“Crises are not only problems, but also always opportunities. We have long wanted to abandon paper policies and are actively introducing electronic policies wherever possible. Also, quarantine made it easier for us to introduce digital channels of interaction with customers who did not want before remote work, now they actively and with pleasure use our services to purchase policies and settle losses, including self-purchase of policies online on our website,” Havrylenko said.
According to Board Chairman of Alfa Insurance Iryna Hevel, “the crisis will force insurers to diversify the portfolio, because no matter what, one need to adapt to new realities, re-profile sellers, restructure work with partners and customers. But also, these new realities will definitely speed up and launch the digitalization of processes in companies. We’ll see how the situation develops, but we would like the economy and each particular business to recover as quickly as possible,” she said.
Most of the market players surveyed consider the worst economic situation in Ukraine and the risk of its deterioration, the state of uncertainty, the lack of stability and understanding of how long it will last, the emotional state of the team and customers to be the most difficult.
