What have been the key changes to the Ukrainian insurance market since the start of Russia’s full-scale invasion in February 2022?
Vyacheslav Andriyko: Following the start of Russia’s invasion, the biggest challenge to the Ukrainian insurance industry has been the war itself. The disruptive and destructive nature of the war had an immediate impact, but the financial sector was able to withstand this severe turbulence and consolidate. The Ukrainian insurance market continues to face demographic and talent challenges, with the emphasis on survival and reducing the catastrophic effects of the war. It is important to underline that since the beginning of the full-scale invasion, both VUSO insurance company and WTW Ukraine have never stopped providing services and support to our clients. Both companies maintain teams in Kyiv and elsewhere in Ukraine. As part of one of the world’s largest insurance and reinsurance brokers, WTW Ukraine has received considerable support from its international colleagues. VUSO has also continued to offer the necessary insurance solutions, often reinsured through WTW Ukraine via the European, UK, and US markets.
Andrii Artiukhov: History offers many examples of reforms instigated during difficult times to improve efficiencies and responsibilities among market players while clearing away non-performing or financially unstable elements. I believe this was the National Bank of Ukraine’s main goal in continuing to pursue financial market reforms despite the war and all the disruption it has brought to the Ukrainian economy. As a result, the Ukrainian insurance market has been culled, with many insurers ceasing their activities. Some did so voluntarily, while others were obliged to surrender their licenses due to tougher regulatory demands.
This ongoing reform process has led to a number of significant developments including stricter capital requirements for insurers and increased reporting standards to ensure greater transparency. Licensing rules have become more stringent, with additional checks on financial stability and business reputation. Insurance brokers and agents of insurance companies must now also meet new qualification requirements and undergo regular recertification. So far, the implications for the market are mostly positive. These changes all aim to improve the quality of insurance services and increase protections for policyholders.
What do you see as the current priorities for the Ukrainian insurance market?
Vyacheslav Andriyko: Complications and escalation threats related to the Russian invasion of Ukraine remain the top risk, not only for Ukrainian businesses but for global companies as well. According to the WTW 2024 Political Risk Survey, the general sentiment of alarm among companies identified in 2023 has since been channeled into preparedness. Some 90% of respondents said they have invested in new political risk management capabilities this year. Research conducted in spring 2024 found that political risk and losses due to political violence are now viewed as the “new normal.” Adequate solutions and preparedness will remain priorities this year and beyond, both domestically in Ukraine and internationally.
Andrii Artiukhov: Key priorities include increased insurance services reliability and transparency, together with greater protection of consumer interests. Despite the current wartime conditions, the Ukrainian insurance market has recently experienced some growth and demonstrated a number of positive trends. This helps to improve the quality of services and expand the range of insurance products available to Ukrainian customers.
We try to provide clients with the specific solutions they need in today’s unprecedented environment. This has included pioneering a new motor insurance product offering full coverage against war risks. So far, 54 Ukrainian companies have signed up to insure their vehicle fleets against war risks.
You have recently launched a new facility covering cargo and war-on-land risks. How challenging was this launch process, and what impact do you expect this new facility to have on the Ukrainian economy?
Vyacheslav Andriyko: In the wake of Russia’s invasion, WTW undertook to assess the new risks this created. In a frankly remarkable feat of brokering, the WTW London cargo team, in collaboration with WTW Ukraine and VUSO, negotiated a tailored war risk insurance solution for transporting goods in and around Ukraine, led off by Markel in the London market.
This bespoke market-first solution provides businesses with the certainty needed to maintain operations despite the ongoing war. It covers risks associated with cargo transportation within Ukraine, ensuring continuity for domestic companies while supporting international firms involved in Ukraine’s rebuilding efforts. This highlights our innovative response to emergent risks and our ability to leverage global insights and local expertise to create practical solutions.
So far, we’ve seen significant market interest and submissions from sectors including logistics, agriculture, commodities, and energy. I am delighted that the launch was positive. International and domestic businesses clearly view our joint solution as a key tool that can help enable their efforts to assist in the rebuilding of Ukraine.
Andrii Artiukhov: VUSO offers a wide range of insurance products designed specifically to address the need for protection in today’s wartime conditions. This program will allow us to expand the range of offers for corporate clients looking to protect their cargo from war risks. We are now working together with our WTW colleagues on some complex annual programs for clients in sectors including agricultural commodities and energy generating equipment, and are also focusing on the needs of multinational businesses that have ongoing logistical operations and multiple years of experience on the Ukrainian market.
The package we offer covers war risk inside Ukraine and can either be provided as a stand-alone policy or in conjunction with a comprehensive cargo insurance package. I’m confident that there is currently nothing similar to this insurance product available in Ukraine. The insurance solution prepared together with WTW has reinsurance support from top Lloyd’s marine syndicates and provides insurance coverage to virtually all regions of Ukraine except active combat zones. So far, we’ve spoken to clients and dealt with submissions from the Odesa, Lviv, Ivano-Frankivsk, Dnipro, Kyiv, and Vinnytsia regions. For clients, it is crucial that this is not a self-retained solution but a properly backed reinsurance program. From our perspective, it is important we can guarantee that all claims underwritten by us will be paid.
Insuring international guests in wartime Ukraine is a major issue. How does your new personal insurance package address this?
Vyacheslav Andriyko: For organizations contemplating working in Ukraine, due consideration should be made to the increasing emphasis on duty of care, and the necessity of providing the best possible protection to their staff and contractors, including Ukrainian nationals, working on behalf of the insured organization. WTW can assist with the arrangement of insurance to protect personnel should the unfortunate happen. Working with Lloyd’s underwriters, we can provide broad cover with minimum administration. This includes coverage for death, disability, and emergency medical assistance with evacuation if required. There is a 24-hour helpline along with in-country medical teams.
Andrii Artiukhov: In many cases, international insurance programs may require additional domestic coverage in Ukraine against accidents and medical expenses. Before the war, VUSO had been one of the leading insurance companies in the travel insurance segment. When the war started and travel abroad became complicated, we revisited our portfolio and used our experience to develop a new product for the domestic Ukrainian market. We can now offer accident and medical insurance for foreigners visiting Ukraine for business. This can be done either as a separate policy or part of an international proposition as described by Vyacheslav.
What are your plans for the rest of 2024 and beyond?
Andrii Artiukhov: We aim to build on our recent experience of introducing war risk coverage for cargo, vehicles, and international visitors, and will continue to seek innovative solutions. It is important for us to support Ukrainian businesses during these challenging times. By responding effectively to the current needs of clients, insurers can directly affect the financial stability of individual Ukrainian businesses and the broader economy. Our main goal is to provide the kind of tailored support and solutions to our clients that will allow them to focus on their core activities without worrying too much about risks created by today’s wartime conditions.
Vyacheslav Andriyko: Our plan is to continue looking after the best interests of our clients. Together with VUSO and in cooperation with several other Ukrainian insurers, WTW will work to develop new products, solutions, and innovative approaches. This will include cooperating more with the US market. Working with American businesses, including insurers, is potentially pivotal for Ukraine. With this in mind, we aim to intensify work with our colleagues in Washington DC and New York in the coming months. This includes plans to increase our engagement with the DFC and MIGA, along with the wider commercial insurance market. We have already submitted investment projects to the DFC and hope to develop cooperation. Looking ahead, our main priority remains unchanged. We are committed to the well-being and security of WTW Ukraine clients, our colleagues, and their families. We will do everything we can to ensure that they continue to feel protected.