This is reported by RBK-Ukraine referencing the press service of the NBU. This information is also provided by Kontrakty.UA.
Cost of Policies
According to the press service, the claim that auto liability insurance policies will immediately increase in price by 2-2.5 times from the beginning of the year is not accurate.
As per the NBU, the new law indeed grants certain freedom to insurers regarding the determination of policy costs, which will depend on the driver's personal history. Therefore, price increases will primarily concern clients with a negative history of accidents or those classified as drivers with a higher likelihood of being involved in accidents (for instance, drivers with little experience or those in large cities).
"The scale of such an increase, according to preliminary estimates, will be around 25-30% in the context of high market competition", the message states.
The NBU also reminded that the new law does not terminate the validity of existing policies but only applies to new ones. Additionally, for privileged categories, there remains the option to obtain a policy at 50% of its cost.
Paper Policies
The regulator also dispels another myth that paper policies will become invalid from the beginning of the year.
"No. The transition to electronic formats for auto liability contracts will occur gradually. Only after a year, starting January 1, 2026, is the final transition from paper to electronic policies expected, with mandatory inclusion in the centralized electronic database of the Motor (Transport) Insurance Bureau of Ukraine," the NBU stated.
The central bank believes this will definitively leave behind the practice of entering into paper contracts in "vans" and numerous cases of fraud.
Policy Sales
The NBU refutes claims that the new law will significantly complicate the sale of policies.
"No. We are indeed focused on ending the semi-legal trade of policies at prices below market value, which has distorted competition for many years, and are fundamentally changing the regulation of insurance intermediaries. However, according to NBU estimates, most companies in the market are capable of meeting the new requirements, particularly concerning consumer rights protection, and are prepared to increase their client base by pushing out dishonest players," the message noted.
As mentioned by the NBU, the new law aims to transform the popular insurance product from a mere paper document for law enforcement into an effective tool for covering vehicle owner risks, as it includes the following innovations:
- abolition of the depreciation coefficient and introduction of the principle that the insurance compensation should restore the vehicle to the condition it was in before the accident;
- implementation of direct damage settlement for vehicles due to accidents, or the option for the victim to claim insurance compensation from their insurer;
- limiting the maximum decision period regarding insurance payments to 90 days and introducing penalties for insurers for violating this period;
- removal of the cap on the maximum insurance compensation under the European protocol;
- making payments from the MTSBU instead of the insurer whose license has been revoked, even before the corresponding bankruptcy case is concluded and final liquidation occurs.
Provisions of the Law
In May 2024, the Verkhovna Rada approved a new law on mandatory civil liability insurance for owners of land vehicles, replacing the law that had been in effect since 2005.
The new law foresees a gradual increase in the maximum amounts of insurance compensation:
from January 2025:
- - for harm to life and health - from 320 thousand hryvnias to 500 thousand hryvnias;
- - for property damage - from 160 thousand hryvnias to 250 thousand hryvnias;
from January 2026, but after the end of martial law:
- - for harm to life and health - up to 1 million hryvnias;
- - for property damage - up to 2 million hryvnias;
within four years from the moment of Ukraine's accession to the European Union:
- - for harm to life and health - up to the equivalent of 1.3 million euros per injured individual and from 6.45 million euros per insurance case;
- - for property damage - up to the equivalent of 1.3 million euros per insurance case.
In case of license revocation, the MTSBU will make payments on behalf of the insurer without waiting for the conclusion of the bankruptcy case and final liquidation.
It is noteworthy that previous increases in compensation amounts for accidents led to higher costs for auto liability insurance policies. In 2022, the National Bank of Ukraine changed the conditions for mandatory civil liability insurance for owners of land vehicles, resulting in price increases.