30 years Excellence in CEE

Best of insurance in Ukraine

Alexander Laukart, General Manager of GrECo Ukraine, about Ukraine´s “tradition” of instability, regulatory changes and how international insurance programmes are implemented.
How do the current political developments and economic conditions in Ukraine influence the insurance industry and clients’ risks?
LAUKART : I may say that it ’ mho our local ukrainian “ custom ” to be in the permanent state of political instability and even economic crisis. All this besides deeply impacts our economy including policy diligence. due to all these reasons the indemnity diligence is quite modest for the biggest country that lies wholly on the european continent. The insurance penetration rate in Ukraine is possibly the lowest in Europe. The local policy grocery store has been actively developing during the last years but is not yet “ mature ” adequate to develop and implement a numeral of policy lines and products and frankincense limiting the proposition and client ’ s potential needs. The fiscal capacitance and resources of the local insurance market are quite limited and a boastfully share of the risks is calm going to international reinsurance marketplace.

In which economic segments/industries do you expect increasing investments in the coming years?
LAUKART : Although the overall situation in Ukraine ’ south economy is not good, some industries are quite attractive and may provide good retort to the likely investors. Ukraine is promptly regaining its placement of being a Europe ’ south “ texture basket ” and farming is decidedly a very attractive industry for investing. I am besides pleased to admit that Ukraine is becoming one of the run worldly concern IT/FinTech outsource services hub and this sector will be an active investment recipient role for the coming years .
Being located on a intersection within Europe with big theodolite potential, Ukraine may besides anticipate adult investments into its infrastructure i.e. railway network, road system, sea ports etc .
What are the biggest risks foreign companies doing business in Ukraine need to consider?
LAUKART : There are a number of factors that may prevent the alien companies from launching their operations in Ukraine or that make their exist commercial enterprise operations in Ukraine not easy and bad. I mean political instability, changing legislation including taxation system, high level of corruptness and very bad judicial practice .
What are the main facts of the insurance market in Ukraine?
LAUKART : The ukrainian insurance market achieved the watch results in 2019 : The Gross Written Premium ( GWP ) is EUR 2 billion, that indicated a 7.4 % growth including the life sentence insurance share of 175 million EUR ( 18.4 %, increase ). The losses paid of 542,7 million EUR including life indemnity contribution 21,8 million EUR are rather depleted compared to the GWP. The dominant allele lines are Motor Insurance, P/C, Health and Life Insurance .
due to the absence of the official information, it ’ randomness hard to say what plowshare of the insurance marketplace consequence is represented by intermediaries but I can estimate that in MTPL and life policy agents/MLM sales share may reach 60 %. In bodied policy i.e. Health Insurance, Energy/Power, Aerospace, Financial Institutions the share of intermediaries sales may reach 50 %. And, of path, multinational corporations that operate in Ukraine are chiefly served by international brokers by their local representative offices and agencies .
Although the current local legislation that regulates policy broking business is not good we can see many universe leading brokers having their agencies and representative. offices here. We expect that our Parliament will soon accept a new insurance police and will introduce new legislation regarding policy broking clientele rule. This will lead to an intensive growth of the indemnity and mediator business in particular .
What specifics differ from those in other countries?
LAUKART : We ’ ve got some local specifics which are not helping the insurance industry to develop and grow quick. The insurers are paying 3 % insurance tax which applies to the insurance agio received. But at the same fourth dimension the indemnity companies are paying standard bodied net income tax, so in this case we may say that local insurers are double-taxed .
The current indemnity broking regulation is not allowing brokers to develop their occupation in Ukraine. The number of broking operations in Ukraine is very humble and international policy brokers do not register broking companies but unfold agencies and spokesperson offices .
Can international insurance programs be implemented? Which special features have to be considered?

LAUKART : One of our core business in GrECo Ukraine is the provision of our services to external companies operating in Ukraine. As we are not a part of Freedom of Services grocery store and non-admitted insurance is prohibited in Ukraine the implementation of global indemnity programmes vitamin a well as the issue of the local policy policies in full complaisance with overlord policy terms & conditions and local legislation requirements is very crucial. We have a dedicated team of specialists who are in conclusion touch with controlling brokers to provide excellent serve in accordance with the agree procedures and serve guidelines. The average experience of our specialists in international customer serve and consult is 10+ years. The main business speech in the company is English .
What regulatory challenges are companies facing? What types of insurance are mandatory?
LAUKART : We ’ ve precisely presently had a switch of the insurance regulator when the regulation assurance was passed from the National Regulating Commission to the National Bank Of Ukraine and as a consequence a mega-regulator was created. We witnessed the process when NBU cleaned the bank sector and doubly reduced the count of commercial banks in Ukraine. The market anticipates that same clean process will be done with indemnity industry and the number of insurers will be drastically reduced .
presently we have 37 types of compulsory policy, as stipulated in Insurance Law. But not all of them are implemented and the main of them are : compulsory Liability of Car Owners ( MTPL ), Civil Liability of Nuclear Reactor Operator, Civil Aviation Insurance, Space Insurance, Hazardous Cargo Transportation etc .
The level of tax load – how seriously the tax burden affects the brokers’ activities?
LAUKART : The indemnity broking business in Ukraine has the same standard tax as any other corporate entity in Ukraine. The current corporate tax rate is 18 % and insurance companies and intermediaries are not paying VAT. This taxation system is quite acceptable and does not prevent us from commercial enterprise exploitation .
When was the last bankruptcy of an insurance company in Ukraine? How do you made preparations to minimize the effects on your clients?
LAUKART : The bankruptcy of an policy company in Ukraine is not a rare and unique case. We used to have about 500 insurers and now as of end of 2019 we had 233 indemnity companies including 23 life insurers. Some insurers have gone bankrupt and the rest had their license being revoked and cancelled. In the past we had the cases when adult insurers went bankrupt and this had a enormous negative fiscal effect on the clients and the insurance market. But presently we see a process of commercialize clean .
This is one reason why we take market security identical serious. locally we are monitoring the local indemnity companies. Our carrier risks are besides monitored on a group grade and we will not work with those companies who are not fulfilling sealed predefined parameters. If the client wants to partner with such a company we powerfully advise him about all possible negative implications this may bring .
What do you at GrECo Ukraine focus on when advising clients and what special expertise have you developed?
LAUKART : In Ukraine we have a active team using their expert cognition to advise external clients but besides those of the local anesthetic energy sector. additionally, we arrange fronting solutions for large multinational firms with operations in Ukraine. We strongly cooperate with our colleagues in Vienna to advise our clients based on their risks and prepare indemnity solutions using international markets .
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Alexander Laukart

Alexander Laukart General Manager
GrECo Ukraine

Alexander studied at the Kiev Institute of Foreign Languages and has exceptional English skills. His indemnity mailman started 1994 and includes experiences in management positions at multinational insurance brokers, policy departments of leading ukrainian firms arsenic well as the local subsidiaries of international insurers. He obtained admonitory cognition of the policy market, specially the placement of larger risks and international cooperation with brokers and insurers. In 2010 he joined GrECo Ukraine as the General Manager .

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