The share of insurance in Ukraine’s GDP is very low and has a downward trend: since 2014 and as of June 30, 2021, it has decreased from 1.69% to 1.14% (by 32.5%), Director General of the Insurance Business Association Viacheslav Cherniakhovsky said at the XXI International Financial Forum in Odesa.
“We have not yet reached the indicators of the first half of 2017 in premiums if we count the market size adjusted for inflation. Achieving the level of penetration of 2% of GDP, laid down in the updated Financial Sector Development Strategy of Ukraine until 2025 year seems unlikely by the end of 2024, especially if there are no changes in the taxation of enterprises when they conclude long-term life insurance contracts for their employees,” he said.
Speaking about the steps that would contribute to the development of the market, Cherniakhovsky noted the inadmissibility of such practices as the accreditation of insurers by banks. “Not a single legislative document contains any accreditations. This is an anachronism and remnants of monopoly. On the contrary, there is a provision of the law on insurance, according to which the consumer has the right to choose an insurer, and it is forbidden to impose the conclusion of an insurance contract within the framework of other legal relations. Banks can only nominate requirements for the structure of the insurance product provided by the insurance company – definitions of insurance amounts, a list of risks, the size of the franchise, the terms of payment and cases of refusal in it,” he said.
Cherniakhovsky said that the National Bank of Ukraine (NBU), as a general regulator for the banking and insurance market, should stop this practice. “This is necessary for all consumers who receive loans now, next month, and not sometime in the future. The practice is unacceptable when banks oblige insurance companies to double prices for owners of collateralized property to receive not only interest on the loan, but and a commission of 50% of insurance payments,” he said.
According to the expert, what they are now trying to consolidate with the new law on the specifics of insurance of agricultural products with state support, in fact, is also a kind of “accreditation”. This approach is unacceptable, since any company that has received the appropriate license has the right to operate in the market for this type of insurance, he said.