Natskomfinuslug Ukraine will toughen the conditions for licensing of insurance companies

On the website of the financial services Commission published the draft regulation “On introducing amendments to certain regulatory legal acts of the financial services Commission of Ukraine», which will change the license terms of insurance activities in Ukraine.

The draft act provides for the approval of the proposal of the financial services Commission on improving the licensing procedures contained in the License conditions of carrying out insurance activities approved by the order of Gosfinuslug of Ukraine from 28.08.2003 №40, and the License conditions of insurance, approved by order of the Commission dated 23.12.2004 No. 3178, namely:

— expanding the list of grounds for annulment and temporary suspension of a license for rapid response to violations of financial services legislation an insurer.

— entering the information into the State register of financial institutions on the basis of the documents submitted for obtaining a license for the provision of financial services.

The current version of the License conditions No. 40 will be given a draft Act with the requirements of current legislation, including the size of the share capital of the company-the insurer. With the new requirements of the market will be cleansed from the idle and unscrupulous insurers, although together with the increase in power is possible and the occurrence of abuse ways of the controller.

The concept of “a temporary stop (restricted) license” will replace the notion of “stop license”. Such sanctions can become a systematic violation of the law “On financial services and state regulation of financial services markets” the insurer, the absence at registration, applied to him no less than two interventions during the year, non-admission of the inspection team for verification or denial of required documents.

To suspend the license, the Commission will also in that case, if the insurance company did not comply with the requirements for the formation or placement of insurance reserves, mandatory criteria and standards of capital adequacy and solvency, profitability, liquidity, asset quality and risk operations. This measure of influence can be applied, if the insurance company does not provide the Commission (or will provide incomplete) statements or other documents upon the written request of the Commission.

The regulator can revoke a license if the insurer carries on licensing activities in the last 12 months. At the moment, the financial services Commission revokes the licenses of those insurance companies that do not use them within 12 months from the date of issuance. The company may also lose its license if over 3 calendar month will not eliminate a violation that was the cause of the application of sanctions or temporary suspension of the license. These changes will make in the license terms of insurance.

According to the participants of the market, according to a correspondent of the newspaper Kommersant-Ukraine survey, all proposed changes are fully justified – a measure of influence on the insurer in the form of a suspension of a license can be very effective. After all, if the company is unable to contract on any of the types of insurance, she will be interested in the most rapid elimination of all violations.

In addition, changes in the list of reasons for cancellation of licences will be a reliable way to clean the market from pseudotrebouxia: around 300 companies from more than 400 market participants is collected only 2% of the premiums. These companies will be the first candidates for disbarment.

However, insurers fear the possible abuse of power by the financial service Commission – they believe that possible cases of suspension of the licenses of stable working companies on formal occasions that may lead to reduction in the number of customers, the loss and the loss of market share.

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