With the russian illegal war against Ukraine reaching the one-year mark and the urgent need to support Ukrainian businesses with proper insurance, the National Bank of Ukraine (NBU) has made a significant step in addressing this need by lifting the restrictions on cross-border payments for reinsurance. The restrictions for making cross-border reinsurance payments were introduced at the start of the war in February 2022.
Now as of 14 February 2023, Ukrainian insurance companies and brokers can make cross-border reinsurance payments to their foreign counterparties subject to compliance with the following requirements:
- an insurance company/broker must be included in a list of insurance companies (the “List”) that is to be formed and maintained by the NBU
- to be included in the List, a company:
- must comply with the requirements regarding transparency of its ownership structure, reputation, specific solvency/capital/risk ratios, and
- not be subject to any penalties or sanctions during the previous year and while on the List
- once on the List, a company is required to provide the NBU with a written confirmation of its compliance as of the last day of each month with specific solvency/capital/risk ratios; and
- a foreign insurance company to which a cross-border reinsurance payment is to be made must have a rating not lower than “A3” (Moody’s Investors Service), “A-” (Standard & Poor’s), “A-” (Fitch Ratings), or “A-” (A.M. Best)
The procedure for inclusion in the List is straightforward. An insurance company should submit a written application to the NBU and provide additional clarifications to the NBU if requested. The NBU will notify the company about its decision within three business days from the date when such a decision is taken.
The NBU is also required to publish the List on its website and update it within three business days when each company is included or excluded from this List as a result of the NBU’s decision.
The new regulatory regime discussed above permits most cross-border reinsurance payments. Yet, there are still some insurance agreements under which payments are temporary prohibited, including voluntary credit insurance (e.g. the borrower’s liability for a loan default) or voluntary insurance of court costs.
