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New Insurance Law in Ukraine: Key Changes


At the beginning of 2024, the Law of Ukraine “On Insurance" (Law No. 1909-IX) became effective. It was adopted in November 2021 to replace the 1996 Law of Ukraine “On Insurance”. The new Law differs significantly from its predecessor in scope and content, emphasizing the importance of solvency, transparency, and integrity of insurance companies towards their clients (consumers).

This publication will explore the legislative changes in the insurance market resulting from the enactment of Law No. 1909-IX, as well as the challenges of its implementation.

1. Insurance classes instead of types of insurance

For the purposes of insurance activity licencing, the new Law has introduced 23 insurance classes (including 5 life insurance classes) instead of over 50 types of insurance.

This change reduces the regulatory burden on insurers who previously had to develop rules and obtain licences for every type of insurance they provided. Additionally, some of the classes now cover up to 12 types of insurance. This simplifies the licencing process for insurers as they can obtain a single licence instead of 12 separate licences.

Paragraph 18 of the “Final and Transitional Provisions” of Law No. 1909-IX ensures a smooth transition into the regulation of the new Law by correlating classes and types of insurance.

An insurer can adjust the scope of a licence by class, including or excluding specific risks within a particular class.

The characteristics and classification features of insurance classes, peculiarities of conducting insurance activities, and concluding contracts by classes of insurance are outlined in the relevant Regulation approved by the Resolution of the Board of the National Bank of Ukraine (NBU) on December 25, 2023, No. 182. Among other things, the Regulation contains a detailed list of risks within each class of insurance, defines the transition from types of insurance to classes, the procedure for reissuing existing licences, and establishes requirements for concluding and performing insurance contracts based on the insurance class groupings.

2. Changes to the conditions of foreign insurers' activity in Ukraine

The legislator, albeit to a small extent, has modified the conditions of activity for foreign insurers in Ukraine compared to the previous Law, in the following manner.

  • Previously, it was necessary for the state of a foreign insurer to participate in international efforts to prevent and counteract money laundering and terrorism financing, as well as cooperate with the Financial Action Task Force (FATF). Now the requirement is that international bodies do not express any concerns about the foreign insurer's state complying with international standards in preventing and countering money laundering, financing terrorism, and financing the proliferation of weapons of mass destruction.
  • A foreign insurer established in a state engaged in armed aggression against Ukraine cannot operate in Ukraine (the Russian Federation, Republic of Belarus).
  • The requirement for the supervisory authority responsible for insurance companies in the foreign insurer's country of registration to have signed a memorandum (agreement) on the exchange of information with the authorised authority of Ukraine has been removed.
  • A foreign insurer, registered in a member state of the World Trade Organization (WTO), may establish a branch in Ukraine if the NBU determines that the state's legislation does not hinder the NBU's interaction with supervisory/regulatory authorities or its ability to exercise supervisory powers over the branch.
  • Law No. 1909-IX explicitly states that the list of requirements for foreign insurers is not exhaustive and may be supplemented by the NBU.

3. Reducing the number of compulsory classes/types

With the introduction of the new Law, a significant number of previously compulsory types of insurance became voluntary, including life and health insurance for employees of companies with many factors that negatively affect the life and health of employees (mental health care facilities, uranium facilities, thermal power plants, mine clearance specialists).

At the same time, it became compulsory to insure against damage to life, health, the environment, and property caused by the transport of dangerous goods, as well as damage caused by emergencies such as fires and accidents in high-risk facilities, and environmental and sanitary-epidemiological accidents.

4. Stricter solvency requirements for insurance companies

Under the Law No. 1909-IX, an insurer's solvency is ensured by complying with the established solvency capital and minimum capital requirements, which are calculated according to the basic or simplified approach, depending on the size of the insurer's business. Solvency ratios are assessed and calculated annually, and the NBU determines the procedure for their calculation.

*All insurance companies have the right to assess their solvency using the simplified approach within three years of the new legislation being enacted.

The minimum share capital may now vary depending on whether the basic or simplified approach is used, instead of fixed amounts of EUR 10 million for life insurers and EUR 1 million for other insurers.

Therefore, according to the basic approach, the minimum share capital for insurers is as follows:

  • UAH 48 million (~ EUR 1.2 million) for those who have obtained a life insurance licence, the right to conduct inward reinsurance, licences for insurance in connection with the use of ground transport (motor vehicle), aircraft, watercraft, and credit and surety insurance.
  • UAH 32 million (~ EUR 800,000) for insurers licenced to provide direct insurance in classes other than life insurance (other than those listed above).

These amounts will be revised by the Regulator (the NBU) every five years.

According to the simplified approach, the minimum share capital for insurers is determined by the greater number either of (i) one-third of the solvency capital calculated under the simplified approach, or (ii) the minimum absolute value of the share capital under the basic approach (UAH 32 or 48 million).

In its publication, the NBU stated the following: “The minimum capital is calculated to cover unexpected losses from risks assumed by the insurer within the next 12 months, considering the probability of their occurrence.

The Solvency Capital Requirement (SCR) assumes a higher probability of realizing the insurer's risks compared to the MCR. The new capital requirements will be introduced in stages”.

As part of its supervisory function, the NBU has the authority to impose additional solvency capital requirements on an insurer if the insurer's performance indicators significantly deviate from the assumptions on which the solvency capital calculation is based. The NBU may also impose additional requirements if the insurer's corporate governance, risk management, audit, and compliance systems do not meet legal requirements or if the insurer faces significant risks that are not accounted for in the solvency capital calculation.

5. Strengthening of organisational requirements for insurance companies

Firstly, in addition to updated rules on insurers' solvency and minimum share capital, the legislator introduced new requirements for the management and ownership structure of an insurance company, including disclosure of the ownership structure and changes to it; the need for mandatory approval by the NBU of the acquisition of a significant interest or increase in interest (directly or indirectly) in an insurer by legal entities or individuals. During all the mentioned procedures, the business reputation and/or financial/property status of such individual or entity is assessed. The new Law sets out a clear procedure and instructions for complying with these requirements.

Secondly, the new (increased) requirements will also apply to the corporate governance system. The NBU will approve the appointment of managers and individuals responsible for key functions, assessing their professional competence and business reputation.

The Law introduces a differentiated approach to requirements for the management bodies of insurance companies depending on the company's size: larger insurance companies have more requirements.

Aiming to improve and increase the transparency of insurance companies, the NBU adopted Resolution No. 194 as of December 27, 2023 “On Approval of the Regulation on Requirements for the Management System of the Insurer”. Among other things, it states that the Regulator shall evaluate the collective competence and effectiveness of the insurer's board of directors and executive body using specific criteria.

Thirdly, the new Law provides detailed regulations for a structure of the system responsible for performing key functions (risk management, compliance, actuarial and internal audit functions), the content of such functions, and requirements for the activities of individuals or bodies responsible for performing these key functions.

Fourthly, any legal entity intending to conduct insurance activities must prepare and submit a business plan to the NBU for the next three calendar years.

6. Updating regulations on insurance intermediaries’ activities

In order to protect the rights and interests of all parties involved in the insurance relationship, the regulation of insurance intermediaries’ activities has been updated as follows.

  • Clear requirements for the professional qualifications, business reputation and experience of insurance intermediaries.
  • A detailed and clear list of information that an insurance intermediary must provide to a customer before concluding an insurance contract has been established.
  • Insurance intermediaries who receive insurance and/or reinsurance premiums and payments from clients, insurers, and/or reinsurers must have compulsory professional liability indemnity insurance.
  • Intermediaries who receive payments under insurance and reinsurance contracts must have separate current accounts for conducting business and a current account with a special regime of use that cannot be attached.

7. Establishing forms of control and supervision for the insurance market by the NBU

For the first time, the Law establishes a list of supervisory measures that the NBU may apply in different cases of violations and at different stages to identify, prevent, and eliminate risks to the insurer's solvency, including at an early stage, in particular:

  • Corrective measures (recommendations for action or inaction; may be issued to an unlimited number of insurers).
  • Early intervention measures (requests for additional information; more frequent financial reporting; restrictions on certain transactions).
  • Enforcement measures (declaration of insolvency, withdrawal of licence, liquidation, imposition of fines, prohibition to conclude new insurance contracts, etc.).

The law outlines the conditions, procedures, and details of each measure.

If an insurer identifies solvency risks during operations or internal audits, it must inform the supervisory authority to create a recovery or financing plan. As part of its supervisory and control functions, the NBU approves the insurer's recovery or financing plan (depending on the violated indicators), approves the continuation of the plan, and receives reports on the implementation of the plan.

8. Regulation of the procedure for an insurance company to withdraw from the market

Law No. 1909-IX establishes the methods, clear conditions, and procedure for termination of insurance activities, however, certain specifics of market withdrawal are provided by NBU acts, for instance, the Regulation on Voluntary Market Withdrawal of the Insurer and Transfer of Insurance Portfolio by the Insurer, approved by NBU Resolution No. 184 as of December 25, 2023.

An insurance company may withdraw from the market in several ways.

8-1. Voluntarily by a decision of the insurer regarding:

  • Reorganisation.
  • Liquidation.
  • Transfer of the insurance portfolio.
  • Liquidation of the insurance portfolio.

Generally, these procedures involve obtaining approval from the insurer's management, obtaining permission from the NBU for the insurer's plan to withdraw from the market, implementing the plan, and cancelling the licence.

8-2. Involuntarily by decision of the NBU regarding:

  • Cancellation of the licence for reasons other than classifying of the insurer as insolvent, with subsequent filing of an application to a commercial court for liquidation of the insurer. In cases where obligations arise from insurance (reinsurance) contracts, the NBU appoints a temporary administrator to protect the rights and interests of consumers. The administrator's duties are transferred by court order to a liquidator from among the arbitration managers (insolvency practitioners) in such court proceedings.
  • Classification of the insurer as insolvent. The NBU must file an application to initiate bankruptcy proceedings to the commercial court within one month of the NBU's decision on insolvency. The court then establishes a process for disposing of property and liquidation, for which it designates an arbitration manager (administrator/liquidator).

9. Amendments to the regulation of bankruptcy proceedings for insurance companies

In accordance with the final and transitional provisions of the Law No. 1909-IX, the Code of Ukraine on Bankruptcy Procedures has been amended.

Firstly, an application for the commencement of bankruptcy proceedings for an insurance company from now on may only be filed by either: a) the liquidator of the insurance company appointed by the court on the application of the NBU on behalf of the insurance company, if the liquidator of the insurance company determines that the property of the insurance company is insufficient to satisfy the claims of creditors; or b) the NBU, if the insurance company is considered insolvent and its licence is withdrawn by the NBU. Insurance companies can no longer be forced into bankruptcy by creditors or other authorities.

Secondly, the Law No. 1909-IX provides a list of reasons for which the NBU must declare an insurer insolvent and to file an application to the commercial court to initiate bankruptcy proceedings within one month (e.g. failure to meet the minimum capital requirements within 90 days of the violation).

Thirdly, unlike the previous regulation, if the NBU classifies an insurance company as insolvent, it will not have the opportunity to resume operations, in particular:

  • Insurance company cannot be subject to rehabilitation proceedings, insolvency recovery measures (that are provided by Ukrainian law for other companies) before or after the initiation of bankruptcy proceedings.
  • The liquidation procedure of an insurer cannot be suspended/terminated, even if individual acts of the NBU that were the basis for its initiation have been recognized as unlawful and cancelled.

10. Implementation challenges

The new Insurance Law was entered into force two years after its adoption, giving insurance market participants and state regulators a sufficient period to develop by-laws and bring their activities in line with the requirements of the new Law No. 1909-IX.

The revised legislation provides insurance companies with an additional transitional period until 30 June 2024 to comply with the requirements of Law No. 1909-IX.

Regarding public authorities, the National Bank of Ukraine, as the market regulator, and the Cabinet of Ministers of Ukraine (CMU) have a key role in aligning regulations with this Law and ensuring the adoption of necessary acts before the date of its enactment.

It should be noted that not all authorities have developed a regulatory framework to implement the Law No. 1909-IX and bring existing regulations in line with it.

The NBU reports that as of the end of February 2024, it has finalized and approved key regulations for the financial services market following the new laws, including the Law of Ukraine “On Insurance”.

In support of its statements, the Regulator provides a list of certain acts adopted to implement the provisions of the new Law, including provisions on the characteristics and classification features of insurance classes, requirements for the insurer's management system, authorisation of persons entitled to carry out actuarial activities, provisions on voluntary withdrawal from the insurer's market and transfer of the insurance portfolio by the insurer, on establishing requirements for solvency and investment activities of the insurer, etc.

Additionally, the NBU has repealed a number of its outdated regulations, acts of the National Financial Services Commission, and amendments to existing bylaws.

Under the provisions of the “Final and Transitional Provisions” section of Law No. 1909-IX, the Government was expected to adopt around 35 documents by January 2024. These documents include the procedures and conditions for insuring certain classes.

However, only two of these documents have been published and approved as of today, namely on liability insurance for legal entities (individuals) using high-risk facilities and civil aviation risk insurance.

Some acts, particularly those of the Ministry of Ecology, are currently under discussion and/or approval by the relevant institution. For instance, there are ongoing discussions on the procedure and conditions for insuring damage to nature reserve fund objects, as well as property risk insurance for oil and gas field development.

Therefore, some of the regulations and bylaws that were intended to govern insurance procedures and terms for specific types of insurance starting from 1 January 2024 have not yet been established. However, the CMU has already cancelled several documents that were in effect under the previous Law.

As a result, the insurance market is currently facing regulatory uncertainty, which may have negative consequences for insurance companies and their clients. We anticipate that the state authorities will soon finalize the development of secondary legislation to implement the provisions of the new Law. This will give insurance market participants more time to adjust to the new requirements.


Yurii Kolos, Attorney-at-Law, Counsel, Vasil Kisil & Partners

Yana Hembarovska, Associate, Vasil Kisil & Partners

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