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Unfortunately, bankruptcies of financial institutions are becoming quite common in Ukraine. At the same time, not only the exit from the market of banks, but also of insurance companies, especially those that were engaged in life insurance, receives a wide social resonance.
Clients of insurance companies are protected much worse by Ukrainian legislation than bank depositors: if the latter have the right to receive guaranteed reimbursement of the value of their deposits in the amount of up to UAH 200,000 from the Deposit Guarantee Fund for Individuals, then in the event of bankruptcy of an insurance company, no one guarantees or reimburses its policyholders (insured persons), who have been regularly remitting insurance payments for decades. As practice shows, few people think about this when concluding life insurance contracts and entrusting their savings to insurers, who, in turn, are not at all insured against bankruptcy.
For example, last year, the most high-profile and unexpected event was the disappearance from the market of the Public Joint-Stock Company "Ukrainian Insurance Company "Garant-Life". On November 1, 2016, the National Committee for Financial Services, by its order No. 2799, revoked the license of this insurer to carry out insurance activities. This decision was made based on the results of an unscheduled on-site inspection of the insurer's activities, during which the inspection team established the fact of the absence of this company at its location.
At the same time, as noted in the press release published on the regulator's website, the National Financial Services Commission has no information (!) regarding the absence or presence of assets in PJSC "USK "Garant-Life". The question of how the assets of this insurer, which, according to the reporting data for the first half of 2016, were submitted for inspection by the National Commission for Financial Services, amounted to almost UAH 196 million, could simply "evaporate" in a few months, remains unanswered.
In other words, another blatant fact of fraud in the financial services market occurred before the eyes of the Ukrainian public, as a result of which thousands of clients of this insurance company were deceived, who at one point lost their savings.
A similar case occurred with another insurer - Private Joint-Stock Company "SK" Ukrainian Insurance Group "Life". On August 16, 2016, the National Commission for Financial Services, based on the results of an unscheduled inspection, appointed in connection with the failure to submit reporting data for the first half of 2016, by its order No. 1944, decided to revoke the license of this insurance company. In both cases, criminal proceedings were opened and a pre-trial investigation is underway into the facts of causing significant property damage to the clients of these companies.
The public is witnessing blatant facts of fraud in the financial services market, as a result of which thousands of clients of insurance companies are being deceived.
The clients of insurance companies who have found themselves in a similar situation certainly have a question: what should they do now to return at least part of their savings. There are actually few options.
Firstly, policyholders (insured persons) who have concluded insurance contracts with a bankrupt insurer can count on the recovery of the amounts of insurance payments due to them within the framework of the bankruptcy procedure. To do this, it is necessary to file an application with the competent commercial court to initiate bankruptcy proceedings against such an insurer. However, before this, it is necessary to obtain a court decision confirming the relevant claims of the creditor, and this court decision should not be enforced.
In addition, the amount of claims of the client (clients) of the insurer filing for bankruptcy must be at least three hundred minimum wages (from 01.01.2017 - this is 960,000 UAH). According to the law, policyholders under insurance contracts under which the insured event occurred before the date of the adoption by the commercial court of a resolution declaring the insurer bankrupt and opening the liquidation procedure have the right to demand insurance payments. If the insured event has not yet occurred, policyholders have the right to demand the return of a part of the paid insurance premium in proportion to the difference between the term for which the insurance contract was concluded and the term during which the insurance contract was actually in force.
A higher level of protection for policyholders would be ensured if there was a system of guaranteeing insurance payments to clients of those insurers who turned out to be insolvent, similar to the system of guaranteeing deposits of individuals in the banking system.
Secondly, if criminal proceedings were opened for the fact of bringing an insurance company to bankruptcy, clients of such a company should contact the relevant law enforcement agencies and provide information on the amount of their claims against the insurer. In addition, it is advisable for them to file a civil lawsuit for compensation for damages within the framework of criminal proceedings.
Of course, a higher level of protection for policyholders would be ensured if there was a system of guaranteeing insurance payments to clients of those insurers who turned out to be insolvent, similar to the system of guaranteeing deposits of individuals in the banking system. At one time, draft laws “On the Fund for Guaranteeing Insurance Payments under Life Insurance Contracts” were registered (in particular, No. 2327 of 02/18/2013). It was envisaged the creation of such a Fund with the mandatory participation of all insurers and the formation of its resources at the expense of contributions from insurance companies. From the funds of this Fund, it was planned to make guarantee payments to insured persons under life insurance contracts in the event of the insurer’s insolvency. Unfortunately, this initiative remained unrealized.
Theoretically, factoring companies may also be interested in clients of bankrupt insurance companies. Due to difficulties in obtaining insurance payments, such companies may offer policyholders to assign their rights of claim against the insurer at a significant discount (for example, for 30-50% of the actual amount of the relevant insurance payments, which the factoring company pays to impatient policyholders immediately, without having to wait for its turn in the bankruptcy procedure). In the future, such a company takes the place of a creditor when claiming insurance payments. If the insurance contract does not expressly prohibit the assignment of the rights of claim under it to the insurer, such an assignment should be recognized as possible.
Source: forbes.net.ua
Author: Olexandr Vyhovsky (attorney at the law firm «Ilyashev and Partners»).
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