New opportunities for foreign insurance companies in Ukra´neWednesday 22 May 2013
Ukraïne: 5 years after Ukraine joined WTO, amendments to the Insurance Act of Ukraine have entered into force. Until now only locally resident companies had the right to carry out insurance business in Ukraine. Following the latest amendments, however, foreign insurance companies will be able to render insurance services in Ukraine through their representative offices provided that they obtain the corresponding licenses.
The new Act (per 17 May 2013), establishes nine criteria to be met by any foreign insurance company in order to acquire the right to set up a representative office in the territory of Ukraine.
Some criteria are concerned with the country of origin of such insurance company. Thus, companies registered in countries which are recognised as offshore jurisdictions, and countries which do not have valid Double Tax Treaties with Ukraine, will not be entitled to open a representative office in Ukraine. Besides, Ukrainian insurance companies should reciprocally be entitled to establish representative offices in the territory of a corresponding country of origin.
The following criteria will be applied to an insurance company intending to set up a representative office:
- It should be given a financial viability rating not lower than established requirements (e. g. not lower than BBB according to Fitch Ratings).
- The minimum guarantee deposit in a Ukrainian bank should be not less than an equivalent of EUR 1 million (EUR 10 million for companies providing services of life insurance), thus corresponding to the minimum authorized capital for Ukrainian insurance companies.
- An insurance company should provide an irrevocable statement confirming its obligation to unconditionally perform liabilities of its representative office.
The new Act also stipulates that insurance reserves of representative offices of non-resident insurance companies should be kept in Ukraine.
As before, non-resident insurance companies without representative offices will have the right to provide auxiliary insurance services, re-insurance services, insurance of risks connected with some shipment services and insurance agency services with respect to the above.
Simultaneously with the new law, statutory Acts will come into force describing the procedure for registration of representative offices and obtaining insurance licences, as well as the requirements to guarantee deposits, in this way creating a legal framework for foreign insurance companies to enter the Ukrainian market.