May 2013

Ukraine Grants Foreign Companies Access to the National Insurance Market

On 17 May 2013 the amendments to the Law of Ukraine "On Insurance" and a number of other related legislative acts adopted in connection with the accession of Ukraine to the World Trade Organization (the "Amendments") became effective. From now on, the insurance activity on the territory of Ukraine can be rendered not only by insurance companies registered in Ukraine but also by registered branch offices of foreign insurance companies.

The branch offices of foreign insurance companies must obtain an insurance license from the National Commission on the State Regulation of Financial Services Markets (the "Financial Services Commission"). The foreign insurance company must be a financial institution and have an insurance license in its own country.

The Amendments also contain a number of other requirements the foreign insurance companies must meet in order to qualify for a right to open branch offices in Ukraine:

  1. the country of foreign insurance companies registration must cooperate with the FATF;
  2. the Ukraine's Financial Services Commission and the insurance regulator of the country in question must have a signed memorandum on data exchange;
  3. Ukraine and the country must have an international treaty on the avoidance of double taxation and prevention of tax evasion in place;
  4. the country must not be on the official list of tax havens (offshore zones);
  5. the foreign insurance company must have a guarantee deposit of at least EUR 10 million placed with the local banks (for life insurance operations) or EUR 1 million (for all other insurance operations);
  6. the foreign insurance company must issue a written irrevocable commitment to unconditionally meet the branch offices' obligations in Ukraine.

The foreign insurance companies are required to compensate all the claims of the insured persons, beneficiaries and/or creditors in case of insufficiency of assets or of the guarantee deposit of their branch office.

The insurance operations of the foreign companies must comply with the Ukrainian laws and the regulations of the Financial Services Commission.

The new law effectively grants foreign insurers full access to the Ukrainian insurance market provided they meet the law's requirements.

For further information please contact
senior partner Armen Khachaturyan and associate Yuriy Radko

© Asters 2013
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