How the war has changed insurance in Ukraine: analysis of market changes and the impact of war risks
17 January 12:33
Since the beginning of Russia’s full-scale invasion of Ukraine, insurance companies have faced new challenges that have significantly changed the market. Despite the challenging economic situation and unprecedented risks, Ukrainians are increasingly turning to insurance services, as they see insurance as an important mechanism of financial security in these difficult times.
Insurance rates: stability and predictability
During the COVID-19 pandemic and the full-scale war, tariffs for insurance products in Ukraine remained stable due to the principles of actuarial calculations. Exclusively for Komersant ukrainskyi
“Tariffs remain stable because they do not change depending on events that occur in the short term. Instead, we use statistics and forecast possible changes in the future,”
– explains Olga Ivantsova.
However, the cost of policies is affected by macroeconomic factors, such as inflation and changes in prices for medical services, medicines, spare parts and repair work.
Increase in the cost of health insurance
Since the beginning of the war, the cost of medical services has increased significantly. According to Sergiy Maistrenko, Director of the Personal Insurance Department at INGO, the cost of health insurance has increased by about 20% over the past year. This growth is due to the increase in the cost of medical services and medicines, as well as changes in the nature of diseases among the insured.
“During the war, people began to seek medical care more actively, the waiting time for scheduled care decreased, and the range of diseases changed. Earlier, colds dominated, but now cardiac and neurological problems are coming to the fore. This, in turn, has led to an increase in the average bill for treatment,”
– says Mr. Maistrenko.
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Military risks: a new insurance standard
One of the biggest changes in the insurance market has been the growing demand for products that include coverage against war risks. According to INGO, the demand for property insurance, including real estate and cars, with war risk coverage has increased several times since the outbreak of war.
“The war has shown how vulnerable houses and apartments can be. Property owners have started turning to insurance companies for financial guarantees in case of damage or loss of property. The growth of premiums in the property insurance segment is indicative: from UAH 110 million in 2023 to UAH 356 million in 2024,”
– comments Olga Ivantsova.
Property insurance against war risks has become a mandatory component for INGO’s clients. This type of coverage includes such risks as shells, missiles, mines, and the consequences of explosions. This coverage extends not only to real estate but also to movable property, furniture, appliances, as well as liability to neighbors.
There is also a significant demand for hull insurance policies with coverage against war risks. In times of war, Ukrainians are increasingly considering full insurance coverage as a way to protect their cars from unforeseen expenses. This is especially true for owners of new vehicles who see it as a way to protect their investment.
“The demand for hull insurance has grown, in particular among owners of new cars, because transport is a large financial investment, and owners want to protect themselves from possible financial losses,”
– says Olga Ivantsova.
The company claims that the procedure for obtaining insurance compensation is clearly regulated. To do this, the client must submit a standard package of documents, including a statement to law enforcement agencies regarding violations of the laws of war. All insurance companies operating in the market offer various options for covering war risks, including terrorism and civil unrest, but the terms and scope of coverage may vary.
New products in the insurance industry with the start of a full-scale invasion
The ARX insurance company also gave an exclusive comment
“We do not associate changes in pricing with the war. For example, the impact of the war on CASCO was noticeable only in the first months, when there was less activity on the roads. However, after the successful actions of the Armed Forces and the counteroffensive, people’s lives and vehicle use returned to pre-war levels,”
– ARX experts comment.
Nevertheless, the war could not but affect the products offered to customers. ARX was one of the first companies in the Ukrainian market to offer war risk coverage, including for motor vehicles and property, which allowed insuring cars, apartments, houses and businesses against losses caused by the war.
“The war has led to the emergence of new products. We were forced to adapt the options for our clients, in particular, to add war-related losses to the insured risks under life, health, property and transportation hull insurance,”
– the company explains.
Reinsurance and expansion of coverage limits
Another important change for ARX was the conclusion of reinsurance agreements with international insurers. The company received support from DFC and began providing coverage for businesses up to UAH 100 million. This allowed the company to significantly increase its war damage payout limits.
“We negotiated with international organizations and received reinsurance protection. Thanks to this, we can now provide coverage for amounts up to UAH 100 million for business, and soon we will also offer conditions with a limit of up to $50 million through the Lloyd’s reinsurance market,”
– the company comments.
Thus, despite the difficult economic situation in the country, the growing interest in insurance indicates an increase in financial awareness among Ukrainians. The war has forced people to reconsider their approaches to protecting their property and health, and insurance has become an important tool to ensure financial stability in times of uncertainty. Interest in both the individual and corporate segments has increased.
Insurance companies, in turn, are adapting to the new realities by providing customers with more products with war risk coverage, which allows them to feel protected in times of war.
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Author: Darina Glushchenko