New conditions for CTPCI: how much will the cost of car insurance increase and what to look for

15 January 18:02
ANALYSIS FROM Komersant ukrainskyi

On January 1, 2025, a new law came into force in Ukraine that significantly changes the rules of motor vehicle liability insurance. It is expected that this will lead to an increase in the cost of motor third party liability insurance policies and other important changes in the auto insurance industry.

For those who already have an MTPL policy, there will be no changes – insurance policies issued before January 1, 2025 will remain valid on the same terms and conditions for the duration of their term. However, for those who will take out a new policy in 2025, the terms will change. In particular, insurance payments will be increased: from UAH 160,000 to UAH 250,000 for car repairs and from UAH 320,000 to UAH 500,000 for treatment of road accident victims.

The new rules abolish price regulation for MTPL policies, which could lead to a rise in price. The deductible (the amount not reimbursed by the insurance company) in all contracts is also canceled.

Beneficiaries, such as combatants and people with disabilities, will no longer have the option of not taking out MTPL insurance. At the same time, they will receive a 50% discount on the policy. The changes also affect the claims settlement process. Mandatory direct settlement is now being introduced, which means that after an accident, a driver will be able to contact his or her own insurance company, not the insurance company of the person responsible for the accident. This will greatly simplify the process of receiving insurance payments.

Another important innovation is that insurance companies will reimburse the cost of repairs without taking into account wear and tear, which will allow restoring the car to its original condition. Repairs will be carried out only at authorized service stations, which will eliminate the need for drivers to look for a service on their own.

[Kommersant] asked the leading insurance companies in Ukraine, which are among the top 10, for comments to find out all the details of the updated insurance, as well as to understand how much the car insurance premium will increase, which area of car insurance is currently the most popular, and what has changed in the work of insurance companies since the beginning of the full-scale invasion.

Read all the details in the article below.

How much will the cost of a car insurance increase?

According to representatives of Arsenal Insurance, the cost of MTPL policies has increased by about 60%. However, according to experts, this increase is accompanied by significant benefits for customers.

“The cost of motor third party liability insurance has increased by 60%, but customers receive much better protection. The sum insured has increased significantly, the deductible has been canceled, the wear and tear factor is no longer taken into account, and the introduction of direct settlement for all companies makes the service much more convenient for policyholders,” Arsenal Insurance noted.

At the same time, Diana Kochenkova, Director of Retail Products and Services Development at UNIQA Insurance Company, explains that in addition to the type of vehicle (car, truck, etc.), the engine size of the car and the place of its registration, the price is also affected by the age of the persons authorized to drive the car, as well as the client’s loss history according to the unified central database of the MTIBU.

“Experienced drivers who have no road accidents in their history through their own fault will receive a much smaller increase (by about 20-30%). Drivers who have been involved in an accident according to the state database will receive a price increase of about 2 times the last year’s price. And if there were a lot of such cases due to their fault, the price increase will be more significant,” says Kochenkova.

Thus, this makes it possible to get a fairer price, when break-even customers pay less and frequent violators get a more expensive policy. The changes that took place on January 1, 2025, are in the client’s favor in one way or another.

“Previously, many people perceived CTPCI as a piece of paper to be shown to the police, but now it is no longer the case. The new CTPCI provides real, substantial protection in the event of an accident to the extent that the injured person does not have to contribute anything from his or her own funds. The insurance payment will be sufficient to fully repair the car or restore health in the event of an accident with victims,” UNIQA says.

Impact of the war on the insurance market and prices

According to experts, after the start of the full-scale invasion, there were no significant and systemic changes in the MTPL market. There have been no legislative changes in the market, and insurance companies have periodically raised prices due to rising car repair costs and the need for indexation, but it is about 10-15% and not about systemic, centralized trends in the market, but about individual decisions of individual companies.

The leading Ukrainian companies that Komersant ukrainskyi contacted highlight the following most popular areas of insurance:

  • motor third party liability
  • hull insurance,
  • insurance for travelers outside Ukraine,
  • home insurance.

Growing demand for health insurance

Health insurance is currently one of the most dynamic areas in the insurance industry. According to the company’s representatives, premiums for health insurance are growing, and most Ukrainians are increasingly aware of the benefits of having health insurance. In addition, many private companies have begun to add health insurance to their employee benefits packages.

“Health insurance in Ukraine is developing rapidly. Premiums are rising because people realize how important it is to have health insurance, and companies are including this type of insurance in their social packages. The latest technologies, such as artificial intelligence, are being actively introduced in this area, and the availability of a mobile application has become critically important for insurance companies,” Arsenal Insurance noted.

The demand for property insurance in Ukraine is also gradually growing, but, according to experts, this is limited by high reinsurance prices, which makes property insurance an expensive product. People are increasingly willing to cover war risks, but the cost of such policies remains high.

Payments for damaged property and business recovery

Equally important is the issue of payments for damaged property caused by shelling. The demand for such policies increased significantly after the shelling, when people became more aware of the importance of having insurance in times of war.

“Payments for damaged property under shelling continue. We offer insurance products for cars and real estate that include coverage of war risks,” Arsenal Insurance said.

At the same time, UNIQA says that the issue of destruction during the war is a matter of reparations, a matter for the state, not individual private companies. However, over time, in our new reality, this statement is gradually transforming.

“For example, our company’s car insurance contracts include compensation for the consequences of shelling, shakedowns, rockets, and their fragments within 10% of the car’s value. At the same time, this extension is provided free of charge and without the need to conclude additional agreements on this. This is the new norm of the new reality,” says Diana Kochenkova.

What will change in the work of insurance companies from January 2025?

UNIQA highlights the following important changes:

  • The deductible is a part of the damage that is reimbursed not by the insurance company but by the culprit of the accident. There will be no more deductibles in MTPL, it is prohibited by law. The entire amount of damage will be compensated by the insurance company within the limit.
  • The payment is always as for new parts. The previous Law provides for the restoration of the car to the condition that was at the time of the accident, i.e. with wear and tear. For cars older than 10 years, this wear and tear could be up to 70%. A situation arose where a car needed 10,000 UAH to be restored, but due to the age of the car and wear and tear, the accident victim received only 3,000 of them. The difference had to be demanded from the culprit (voluntarily or through the courts) or paid out of pocket. Now, the insurance company must always pay as if it were new parts, even for used cars. This means that the insurance payment should always be enough to repair a car that has been damaged in an accident. You do not have to pay anything out of pocket if the damage does not exceed UAH 250,000.
  • The insurance company now has to pay not according to the expert’s calculation, but according to the service station’s invoice. That is, again, so much that the funds are enough to fully restore the car at the service station.
  • Direct settlement. Now, the injured person has the right to apply for insurance compensation to the insurance company where he or she has concluded his or her CTPCI, and not to the company of the culprit. This means that now it makes sense to choose a reliable, trusted insurance company that you know and trust, because you are buying a policy for yourself, not for the victim.
  • Free pricing. The state no longer regulates the pricing of CTP. Insurance companies rely on their own statistics and calculations.

Thus, the changes taking place in the Ukrainian motor insurance market affect the entire insurance industry. Despite the increase in tariffs, customers receive much better protection and more convenient conditions for insurers to resolve claims. At the same time, the demand for health insurance and property insurance covering war risks is showing steady growth. However, the high cost of reinsurance remains a significant obstacle to the development of this segment in the market.

Author – Daryna Glushchenko



Darina Glushchenko
Автор