NBU head expects insurers to fully align their operations with new rules by year-end
MOSCOW. Oct 17 (Interfax) - National Bank of Ukraine (NBU) Governor Andrei Pyshny expects insurers to fully bring their operations in line with the requirements of new Ukrainian legislation before the end of 2024, primarily as regards solvency, information disclosure and the management system's proper functioning,
"We positively assess the performance of the insurance market, which fulfills its obligations to consumers despite martial law and all the difficulties associated with it. Upon completion of this transformation, the insurance market may become very interesting for private investors," Pyshny said in an interview with Ukrainian media.
"We clearly see such a prospect, possibly even in the following year," he said.
Insurance companies had a July 1, 2024 deadline to meet financial standing requirements, he said. The majority of them did that, and today they are transparent and solvent, while the insurers that have not done that yet are on their way to meet these requirements.
"A number of companies have applied for the National Bank's approval of plans to resume activities and financing, and some have decided to leave the market. This one again points to the market's maturity and an awareness that a business model and the ability to effectively compete in this sector requires either large investments or responsible decisions," Pyshny said.
The efficiency of market entities that focus on transparency, competitiveness and building a market model is growing, he said.
When commenting on a reduction in the number of non-bank financial market participants over the past two years, Pyshny said that the assets of financial companies and the insurance market have grown, while the assets of pawnshops and credit units have shrunk.
The non-bank financial market is now going through the recovery stage that the banking sector has already passed, Pyshny said, adding that it includes disclosing the ownership structure, applying new requirements for capital, reporting, financial monitoring, internal contract system formation, building accounting and registration systems, and a corporate governance system.
"This evolutionary process should make the market more stable, attractive, transparent, understandable, and safe. It shouldn't be an infrastructure for servicing shadow turnover and some tax optimization system," he said.
The NBU also attaches importance to ownership structure issues, he said.
"We set the goal of bringing ownership structures to light, eradicating the nominal ownership phenomenon, and investigating sources that funded the creation of a company and maintain its capital today. Given the initial market size, around 2,000 participants, these are serious challenges, but there is no other way for us to bring this "wild field' in compliance with international standards," he said.
As reported, the NBU became the regulator of non-bank financial institutions from July 1, 2024, taking over the functions of the defunct National Commission for State Regulation of Financial Services Markets. The move left two regulators on the market - the NBU and the National Securities and Stock Market Commission.
The number of this market's participants has dropped from 1,674 to 946 over the past two years, with the number of financial and leasing companies shrinking from 968 to 525, the number of insurers from 127 to 75, the number of pawnshops from 192 to 114, the number of credit units from 185 to 111, and the number of internal payment systems from 38 to 15. Meanwhile, the number of debt collection agencies has grown from 65 to 75.