Representatives of Ukraine’s insurance industry have urged the country’s regulator to take sweeping measures to help firms survive and recover from the war with Russia.
The Insurance Business Association, together with the League of Insurance Organizations of Ukraine, have developed ideas for a “Marshall Plan”, a set of measures to help firms get back on their feet, and urged the National Bank of Ukraine (NBU) to support them.
The Marshall Plan was the nickname for the US foreign aid programme for Europe after World War II, and has become a phrase associated with any major economic recovery package.
Vyacheslav Chernyakhovsky, general director of the Insurance Business Association, told InsuranceERM: “The core points of this plan concern not so much foreign financial assistance as organisational and regulatory issues. Basically, it reflects the position of companies with Ukrainian stakeholders.”
He previously told InsuranceERM the majority of insurers in Ukraine have seen their revenues drop by 50% to 90% during the conflict.
Writing in Ukrainian newspaper NV on 29 April, Chernyakhovsky outlined several proposals, including: a delay of IFRS 17 implementation in Ukraine; eliminating the 3% tax on non-life insurance premiums; and further softening of regulatory requirements, namely by revising the calculation of reserves of unearned premiums.
On IFRS 17, Chernyakhovsky said the NBU should postpone the effective date, currently on 1 January 2023, for at least three years.
He told InsuranceERM IFRS 17 implementation is “untimely” and “extremely expensive” for Ukrainian insurers.
“Requirements are redundant for the Ukrainian insurance industry, since the market and financial instruments are simple,” he said.
“IFRS 17 adoption will cost insurers a huge amount of money for renewing IT infrastructure, hiring new employees, etc. There is no money for these additional expenditures and such an investment will not return in the nearest future.”
In general, he said most Ukrainian insurers are at the first stage of implementation, which includes studying the requirements of the standard.
Insurance industry representatives met with the NBU to discuss the Marshall Plan a month ago, but the regulator has yet to decide whether to move the proposals forward. Chernyakhovsky added he had been personally consulting on the plan with experts from international financial institutions.
The All-Russian Insurance Association is also lobbying the regulator, the Bank of Russia, to delay the implementation of IFRS 17 and 9, until 1 January 2025. The association argued insurers’ resources are consumed by the need to deal with Western sanctions, falling sales and liquidity problems.