Overview of the insurance market of Ukraine for the first half of 2024: premiums increased to UAH 24.2 billion
The insurance market of Ukraine in 2024 shows stable growth according to the main performance indicators. Forinsurer analyzed data from the NBU and offers an analysis of the indicators of the insurance market of Ukraine for the first half of 2023-2024.
The number of registered insurance companies has decreased on the market. If 115 companies were registered in 2023, then in the first half of 2024 their number decreased to 90 (the report was submitted by 82SC), which indicates the consolidation of the market and the strengthening of regulatory requirements. At the same time, the number of life insurance companies remained unchanged — 12.
The number of companies reporting also fell from 113 to 82, which may signal the exit of smaller players or those that have not had time to adapt to new market conditions.
In 2024, 8 companies were excluded from the State Register, which is more compared to 7 companies in 2023. This additionally confirms the general trend towards a decrease in the number of players on the Ukrainian market.
Gross and net insurance premiums
In the first half of 2024, gross insurance premiums increased to UAH 24,210 million compared to UAH 21,355 million in 2023, which indicates an increase in demand for insurance products. In particular, growth was recorded in premiums received from individuals and businesses. Premiums for insurance classes, other than life, amounted to UAH 21,572,000, which is also more compared to the previous year.
Shares of insurance premiums returned to policyholders amount to UAH 566.8 million. The main part of these funds belongs to legal entities and individual entrepreneurs (UAH 279.3 million), which indicates cases of revision of terms or termination of contracts.
Total earned premiums amounted to UAH 20.37 billion, of which net premiums were UAH 18.19 billion. This demonstrates the high efficiency of insurers’ activities and the growth of market share.
Gross life insurance premiums for 1P 2024 amounted to UAH 2.63 billion. One-time premiums for life insurance classes amounted to UAH 221.5 million. This indicator is not the main driver of the market, and periodic premiums of UAH 459.9 million reflect a stable part of revenues in this sector. Premiums for previously concluded life insurance contracts (UAH 1.94 billion) show a tendency towards long-term contracts that preserve the stability of the portfolio.
Net insurance premiums in 2024 amounted to UAH 21,857,000, which is higher than in 2023 (UAH 20,895,000). This reflects the growth of insurance revenues after deducting the reinsurance share.
Classes instead of types of insurance
From January 1, 2024, an updated division of insurance into 23 classes reflecting homogeneous insurance risks was introduced. For regulatory purposes, companies now provide information across 25 lines of business, covering non-life and life insurance products. In the II quarter, insurance premiums increased for business lines covering transport insurance (CASCO, OSCPV, “Green Card”), while for personal insurance (life and health) they slightly decreased.
These insurance products remain key in the market: according to the results of the II quarter, they received 84% of premiums and made 93% of all payments. In other business lines, during the II quarter, premiums mostly decreased, only premiums for cargo and baggage insurance (+11% q/q), liability (+1% q/q) and assistance (+28% q/q) increased.
Payments for all insurance products in the II quarter, except for insurance of financial risks, baggage and cargo and assistance, grew.
These data indicate high activity in the segments of vehicle insurance (CASCO, OSCPV) and health insurance, as well as significant demand for accumulative life insurance.
Insurance payments
Gross insurance payments also increased to UAH 9,959 million in 1H 2024, which is a significant increase compared to UAH 7,818 million in 2023. Payments for insurance classes other than life amounted to UAH 9,314,000, which is also higher than in 2023. The aggregate level of payments for the last four quarters was 40%, in the II quarter – 44%.
Net insurance payouts also increased from UAH 7,744 million in 1H 2023 to UAH 9,089 million in 1H 2024, which confirms the general trend towards an increase in insurance claims and payouts to clients.
Reinsurance
In 1H 2024, the volume of reinsurance premiums transferred to reinsurance amounted to UAH 2,354,000, which is slightly lower compared to UAH 2,437 million in 2023. However, the amount compensated by reinsurers increased to UAH 869 million compared to UAH 80 million in 2023. This indicates the activation of reinsurance mechanisms and the reduction of the financial burden on insurance companies.
Number of signed contracts
The number of concluded insurance contracts during this period reached 16,177,000, and the majority (15,620,000) of contracts related to insurance in classes that do not include life insurance. Conclusion of life insurance contracts turned out to be much less active, where the number of contracts amounted to 557,000.
At the end of the period, the total number of active insurance contracts reached 20,895 thousand., where 18,820,000 contracts were for insurance by classes other than life insurance, and only 2,075,000 were for life insurance.
At the end of the period, 8,893,000 people were insured under direct insurance contracts for classes that do not include life insurance, and 2,030,000 people were insured under life insurance contracts.
Technical reserves also underwent significant changes: in 2024, they amounted to UAH 32,086 million, of which UAH 20,142 million were for insurance classes other than life insurance, and UAH 11,941 million were life insurance. In 2023, technical reserves were higher and amounted to UAH 42,482 million, which indicates a decrease due to the exit of players from the market.
Due to the introduction of IFRS 17 “Insurance Contracts”, from 2023 insurers will calculate technical reserves in financial statements using new approaches. At the same time, for prudential purposes, technical reserves are calculated in accordance with the requirements of the regulator, the updates of which came into force on January 1, 2024.
The update of regulatory requirements had a significant impact on insurers’ revaluation of the volume of the premium reserve and, to a lesser extent, on the volume of the loss reserve. In July, the aggregate loss reserves of risk insurers decreased by 1% compared to the indicators of the end of 2023, estimated according to the old approaches. However, in the II quarter, this indicator increased by 3% q/q. However, in view of the faster rate of growth of premiums and payments since the beginning of the year, the coefficients of their coverage by loss reserves further decreased to the “pre-war” level.
Eligible assets for the calculation of regulatory capital in 1P 2024 amounted to UAH 56,740 million, which is lower compared to the assets defined by Article 31 of the Law of Ukraine “On Insurance” in 2023 (UAH 54,579 million).
The amount of paid-up authorized capital also decreased from UAH 6,298 million to UAH 5,698 million in 1H 2024. This may be the result of market consolidation.
The technical result amounted to UAH 1 billion, which indicates profitable activity in the insurance sector, supplemented by investment income of UAH 2.26 billion, which shows stable income from investment activities.
Other liabilities, except for technical reserves and subordinated debt, which is taken into account in the regulatory capital, amounted to UAH 5,391 million
The total expenses for settlement of losses amounted to UAH 733.5 million. The main expenses are paid for the labor of the staff and payment for the services of the assistance institutions, which indicates the provision of significant services to clients to ensure the settlement of insurance cases.
Expenses for conducting and maintaining insurance activities amounted to UAH 1.65 billion, of which a significant part is for labor costs. This indicates high operational costs of insurers.
General trends and prospects of the insurance market of Ukraine
In general, the Ukrainian insurance market in the first half of 2024 shows stabilization after the previous period. There is an increase in reinsurance, which indicates a more cautious risk management strategy.
The market shows an increase in the volume of reinsurance and payments, despite the overall reduction in the number of companies and concluded contracts. The trend towards consolidation and a shift in emphasis to reinsurance may continue, which indicates the industry’s adaptation to difficult conditions and the desire to reduce risks.
In July, insurers completed the process of adapting their activities to new regulatory requirements. Most companies successfully passed this stage, but some institutions had to agree with the NBU on plans to restore solvency or financing. Insurance companies that failed to submit an appropriate plan on time risk losing the opportunity to continue operating in the market. At the same time, those who have agreed their plans with the regulator must strictly adhere to them in order to improve their performance.
The main risk remains for small institutions with little market influence. Exiting the market of companies with a low level of solvency can increase the sustainability of the industry in the long term.
In May, the Verkhovna Rada adopted a new law on mandatory civil liability insurance for vehicle owners (CIP). The main changes were the increase of maximum payments to the level of EU countries, the introduction of a “fair price” for each policyholder, as well as a new system of direct settlement. The law will enter into force on January 1, 2025.
There is also a change in approaches to the preparation and submission of reports. Since the beginning of the year, non-bank financial services market participants have been reporting according to the new rules. In particular, the frequency of submission of certain types of information has been changed for financial companies and pawnshops. Starting in January 2025, institutions will report data on regulatory balance sheets and off-balance sheet liabilities on a monthly basis, instead of the current quarterly reporting. | Forinsurer