Bankruptcy of individual insurers does not threaten stable operation of financial sector – NBU
Even the largest insurers are not currently systemically important for the financial system of Ukraine, unlike large banks, so it is unlikely that the bankruptcy of insurers will cause critical consequences for the financial sector, although it will slow down the development of its non-banking part.
According to the Financial Stability Report, December 2025, published on the website of the National Bank of Ukraine (NBU).
"Insurance products from different institutions are interchangeable, and portfolios can be transferred from one institution to another as needed. Therefore, the improper functioning or bankruptcy of individual insurers does not threaten the stable operation of the financial sector. Accordingly, no insurer can receive the status of systemically important," the information emphasizes.
Additionally, it notes that the Ukrainian insurance market is small, with insurers holding only a 2% share of the financial sector assets regulated by the NBU. Last year, the ratio of gross insurance premiums to GDP was only 0.7%. Although insurers hold more than 40% of their assets in banks, they hold only about 1% of banks' client funds.
According to the NBU, the domestic market is characterized by a fairly low loss rate and, at the same time, high combined ratios. Therefore, profitability is achieved through fairly high income from investment activities, particularly due to high interest rates. However, this state of affairs increases interest risk for insurers.
The main reason for the high combined ratio is the significant operating expenses, particularly sales expenses. The agency network is the largest sales channel. Compared to other European insurers, Ukrainian insurers' acquisition and administrative expenses seem excessive.
"In the EU, the average loss ratio is about 10 percentage points (pp) higher, but the combined ratio is almost the same as in Ukraine. This indicates moderate efficiency of sales channels. In recent years, insurers have digitized their business; accordingly, companies can use online applications and their own websites more actively for sales and cost reduction. Increasing the efficiency of all sales channels to control insurers' costs is a priority task for the market," the regulator emphasized.