Problems and prospects of the insurance business in Ukraine in war conditions

Анотація

A developed insurance system is the key element of stable business development in any country, which allows reducing risks and thus contributes to increasing the investment attractiveness of business projects. This becomes particularly relevant during the war, which significantly increases the risk level of even the safest projects. It applies not only to direct insurance of actual military risks, but also to traditional types of insurance for any "peaceful" economy, such as property insurance (real estate, cars, equipment and machinery) or life insurance, the risks for which in war conditions also inevitably increase even outside the actual combat zone. It should also be noted that military risks traditionally belong to force-major exceptions from standard insurance contracts, so martial law often forces appropriate adjustments to the proposed insurance contracts in this area as well. This paper researches the reaction of Ukrainian insurance business upon military realities. The changes in number and scale of insurance companies in different fields as well as main insurance trends and tendencies are analyzed. During wartime, the insurance sector, as well as other finance-related sectors, shows a clear tendency towards concentration. There is also a forced reduction in the number of insurers: the war accelerated the processes of concentration of the insurance market and the displacement of small and, accordingly, weak companies, which are already inherent in the Ukrainian market. Despite the war, the insurance market in Ukraine remains quite profitable. Even with the reduction in the number of insurance companies by 2.5 times during the war, their total assets, on the contrary, increased by more than a quarter. This undoubtedly indicates the development of the insurance sector in Ukraine and the increase in its financial stability. In general, the trend towards a decrease in the number of insurers reflects market consolidation and is primarily due to the strengthening of regulatory requirements of the National Bank of Ukraine, which causes a trend towards general optimization and leads to increased stability of the insurance sector of Ukrainian business and, due to the scale economy effect, contributes to improved coordination and increased quality of customer service. The insurance market has already adapted after the shock of a full-scale invasion, but has not yet shown any tangible innovative trends and initiatives in insurance of specific military risks. However, in general, we can state that the insurance market of Ukraine is demonstrating positive trends, despite the challenges of the war.

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