UKRAINE: NATIONAL FINANCIAL SERVICES COMMITTEE TOULGHENS SOLVENCY REQUIREMENTS FOR THE LOCAL INSURERS

The National Financial Services Committee toughens solvency requirements for the local insurers. The Ministry of Finance registered an order of the Committee on approval of the Regulation on mandatory criteria and standards of capital adequacy and solvency, liquidity, profitability, asset quality and riskiness of the insurers’ operations.

According to the member of the Committee Alexander ZALETOV, the Regulation was prepared based on international experience and in cooperation with representatives of insurers’ associations and actuaries.

The Regulations provides for an approach to establish regulatory requirements for insurers’ capital and this approach corresponds with models accepted in international practice, in particular, the principle 17 “Capital adequacy” of the Main principles on insurance activity of the International Association of Insurance Supervisions (IAIS), solvency requirements according to the Directive No 2009/138 / EU of the European Parliament and Council d/d November 25, 2009 (Solvency II) and recommendations of the Insurance Supervisory Authority of the European Union (EIOPA).

As Alexander ZALETOV pointed out, the Regulation of the Committee is an important step to toughen solvency and liquidity requirements of insurers in terms of ensuring stability and dynamic development of the financial sector as stipulated in the Comprehensive Program for the Development of the Financial Sector of Ukraine until 2020 which was approved by the National Council for reforms on May 15, 2015.

According to new requirements insurers should comply with the established criteria of liquidity, profitability and quality of assets, solvency and capital adequacy, norms of riskiness of operations. The Regulation established requirements for assets’ quality which should consist of low risk assets. For insurers providing mostly voluntary insurance, except for life insurance, this norms should be not less than 20% of insurance reserves, and for other insurers – not less than 40%.

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