The Ukrainian auto insurance market is in a state of constant change driven by economic, legal, social, and political processes. Car owners have to regularly monitor changes in this area. To get reliable and verified information, it is best to visit the official website of the insurance company where the car is insured. There, in addition to current news, you can find information about discounts on insurance products, special conditions, or programs for policyholders.
IC "VUSO" shares its opinion on key events in Ukrainian auto insurance
Mandatory insurance — motor third-party liability (MTPL) and "Green Card" — are mandatory types of policies without which driving a car is prohibited. The absence of MTPL threatens the driver with a fine from 425 to 850 hryvnias, which corresponds to 25-50 non-taxable minimum incomes of citizens. Without a "Green Card," leaving Ukraine is impossible. In such cases, the choice between "to insure" and "not to insure" simply does not exist.
The situation is different with voluntary comprehensive car insurance against damage and theft (CASCO) or with additional civil liability protection (DCL). Here, drivers can choose a convenient moment to insure themselves or their car, waiting for favorable offers or the emergence of new products. Auto insurance news from IC "VUSO" helps track current and upcoming changes in this area.
Attention to car owners: the MTPL procedure is changing
The "Green Card" policy will gain enhanced protection
What will happen to the price of CASCO?
In 2016, amendments to the Law of Ukraine on MTPL come into force. The draft law envisages:
×changes in the management system and functions of the Motor Transport (Insurance) Bureau of Ukraine (MTIBU);
×introduction of an electronic policy;
×strengthening control over the availability of mandatory insurance;
×launch of a direct settlement system for payments.
The mechanisms and methods of implementing electronic MTPL policies are still at the development stage. How exactly they will work will become clear closer to the launch, scheduled for mid-2016. The goal of the innovation is to simplify document flow and facilitate control over the availability of mandatory insurance.
Regulatory authorities will also gain access to the centralized MTIBU database, allowing them to check the availability and authenticity of MTPL contracts. This should help combat fraud and reduce the number of fake policies.
Direct settlement of payments should speed up the compensation process for those injured in road accidents. The injured party will be able to apply for payment either to their own insurance company or to the insurer of the at-fault party. Thus, the injured party will have a choice of which organization will handle the settlement of the insured event. The main goal is to simplify the process and reduce the time from the accident to receiving compensation.
Settlements between insurers of the injured and at-fault parties will be conducted through an authorized bank and MTIBU. The "Belgian model" is proposed as a benchmark, where losses are divided into classes depending on size. Third-class damage exceeding UAH 100,000 will not be included in the direct settlement system and will be compensated in the general order by the insurer of the at-fault party.
The launch of direct settlement is scheduled for spring 2016. At the first stage, insurer participation in this system will be voluntary. Companies will be able to apply it before the new version of the MTPL law comes into force. Currently, 15 insurance companies have expressed a desire to join the system, which together control approximately 55-60% of the market.
The period of voluntary participation will be a kind of testing of the system. During this time, the mechanism of interaction between clients, insurers, and MTIBU will be refined and adjusted. By the time participation becomes mandatory, the process is expected to be as clear as possible for all parties. The transition to the mandatory stage is scheduled for June 2016.
The current "Green Card" certificate form was introduced in 2010. Insurers can sell this policy form until the end of 2015. Currently, it is a document filled out by hand with a ballpoint pen.
From January 1, 2016, a new form of the "Green Card" certificate is introduced.
The updated document will consist of three parts: the original and a copy of the mandatory motor third-party liability policy, as well as an international motor insurance card. The purpose of the changes is to strengthen protection and combat counterfeits. The guarantee of authenticity will be that the policy will be printed through the unified MTIBU database, which will eliminate the possibility of falsification. To issue a "Green Card," the insurer will have to apply online to MTIBU. In the database, the policy will be assigned a unique number, and a record about the car will also be entered. Policyholders who received policies in 2015 need not worry: all certificates issued up to and including 31.12.2015 will be valid for the entire period for which they were issued. There will be no need to reissue them on January 1, 2016. The tariff system will remain the same — the price of the policy, as before, will be tied to the euro exchange rate.
Due to the devaluation of the hryvnia, prices for goods and services in the national currency have risen, and the insurance market is no exception. In the first quarter of 2015, the cost of CASCO compared to the same period last year doubled. This led to a reduction in the CASCO sector, by various estimates, by 20-30%.
Insurers tried to rectify the situation by revising tariffs and offering installment plans. By the end of the first half of the year, CASCO tariffs on average decreased by 1 point. In the most mass segment — cars of the middle price range owned by individuals — CASCO at the beginning of the year cost 5% of the insured sum, and by June it dropped to 4-4.2%. For legal entities, tariffs were lower: 3-3.5%. In some cases, insurers reduced rates for enterprises to 2%, which was already bordering on dumping.
Given the growth in the market value of cars in hryvnia, for many owners the insurance payment even at a minimum rate of 4% becomes too large. For example, if a car costs UAH 300,000, annual CASCO insurance will cost UAH 12,000. To reduce the burden on clients, insurance companies use different approaches:
1. Variety of payment methods. There are programs that allow you to buy insurance for half the cost. If an insured event occurs, the amount of payments is adjusted taking into account the unpaid part of the premium. Increasingly, insurers offer installment plans. If earlier the schedule involved semi-annual or quarterly payments, then in 2015 monthly CASCO payments became popular.
2. Sales without intermediaries. Insurers are more actively promoting online sales through their websites, refusing intermediary commissions and making insurance cheaper.
3. Reduced set of risks or limited insured sum. Often, cars are insured only against one risk — for example, an accident, or for a specific amount, rather than the full market value.
All the listed innovations show that insurers are ready to change their approaches, considering not only their own benefit but also the interests of clients.
