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The financial market regulator has published a set of data on "wards", which paints a real picture of what is happening in the financial market. The National Commission for Financial Services published the figures of all insurers, and it unexpectedly turned out that there are many large «unknown» companies in the insurance market.
The National Commission for State Regulation of Financial Services Markets is trying to make the market more transparent. To this end, the National Commission for Financial Services has published statistical data for each financial market participant. Previously, the regulator published statistics only in aggregate form, without indicating companies, and the rankings of participants in financial market segments were made by specialized media and associations. The regulator did not publish the data set of its own accord, but in compliance with the Cabinet of Ministers Resolution No. 1100 of December 20, 2017 on the publication of information by state bodies.
The tables published by the commission show the results of the activities of 271 insurance companies last year, although as of January 1, there were 294 of them in the state register. This distorted the overall market indicators: 271 insurance companies collected insurance premiums for the past year for UAH 41.98 billion, while earlier in the annual report the regulator reported UAH 43.43 billion in premiums. The amount of insurance payments also does not match in the reports: UAH 8.3 billion and UAH 10.5 billion, respectively.
The commission explained the incomplete data by the fact that not all companies submitted reports for 2017. "There are companies that have not submitted reports for certain reasons, and therefore there is nothing to publish. They will be subject to pressure measures in the form of fines for failure to submit reports," - told FinClub member of the National Financial Services Committee Oleksandr Zaletov.
The insurance market remains highly concentrated. The top 15 companies in terms of premiums account for 52.2% of the market, and in terms of payments - 42.3%. At the same time, the top 15 include companies that are rarely mentioned in the media: "Aktiv-garant", "Bifest", "Proxima", "Inrezerv". The top 30 account for 74.3% of premiums and 62.7% of payments.
| No. | Name | Premiums, UAH billion | Premiums transferred to reinsurance, UAH billion | Level of initial reinsurance | Payments, UAH million | ||
| 1 | Flint | 3,804 | 3,530 | 92.8% | 167.6 | ||
| 2 | Active-Guarantor | 3,135 | 3,016 | 96.2% | 0 | ||
| 3 | Unica | 1,703 | 0,664 | 39% | 443.9 | ||
| 4 | AXA Insurance | 1,679 | 0.060 | 3.6% | 814.6 | ||
| 5 | Arsenal of Insurance | ||||||
| 6 | Beefest | 1,320 | 0,041 | 3.1% 7 | 0.626 | 48.6% | 234.7 |
| 8 | Proxima | 1,152 | 1,140 | 99% | 0 | ||
| 9 | INGO Ukraine | 1.065 | 0.303 | 28.4% | 373.0 | ||
| 10 | TAS | 1.024 | 0.112 | 10.9% | 371.3 | ||
| 11 | ASKO-Medservice | 1.003 | 0.941 | 93.8% | 3.6 | ||
| 12 | Ukrainian Insurance Group | 0.817 | 0.085 | 10.4% | 330.9 | ||
| 13 | Leading | 0.813 | 0.016 | 2% | 481.2 | ||
| 14 | Inreserve | 0.777 | 0.858 | 110.5% | 0 | ||
| 15 | Credo | 0.762 | 0.312 | 41% | 0 |
In the list of insurers, FinClub found 13 insurers that did not attract premiums at all: «Ukrpromstrakh», «Ukrgazprompolis-Life», ST «Nadiya», «Dar», «Hermes», «Prestige Group», «Mega-Garant-Life», «Life Capital», «Finaco-Life», «Formation of reserve», «Chesno-Insurance», «Grantservice», «Oranta-Luhan».
«There are companies that, despite their age of five to seven years, may not be operating due to the fact that they actually have no business. We identify such companies every year and, in case of violations, we apply measures of influence to them, including removing them from the register. Now many companies have begun to independently submit applications for exclusion from the register», – said Oleksandr Zaletov.
Out of 271 companies, 76 insurers had no insurance indemnities at all. In the top 15 of the market by collected premiums, there were five companies without payments («Aktiv-garant», «Bifest», «Proxima», «Inrezerv», «Kredo»), and in the top thirty of the market - eight (also «Trust Ukraine», «Energia», «Nika»).
The National Commission for Financial Services names several reasons for this situation. «In some companies, it may be the case that there is an insured event, but the payment date has not yet come. It may also be that the insurer has no insured events at all, since the portfolio is insignificant. Another reason may be that companies do not pay compensation due to a low level of solvency, or, even worse, because they are not engaged in insurance, but, to put it mildly, minimizing taxes for business entities, – told FinClub Alexander Zaletov.
The lack of insurance compensation may also indicate other reasons. «There were times when companies were opened for resale to investors who wanted to quickly enter the market, without waiting for the procedure for registering a new company. The second reason is more prosaic – it is the use of the insurer as a «tax pit» or a bankrupt, on whom toxic obligations can be dumped. Both reasons are risk points for the consumer. Both the change in assets and the second reason mentioned can significantly change the risk of default in the direction of its increase», – unofficially said one of the insurers.
«Sleeping» companies may be temporary. «There are companies that have zero fees. These are, in fact, companies that are currently in the status of a change of owner», – says the general director of the «Insurance Business» association; Vyacheslav Chernyakhovsky.
Market participants pay attention to the low labor costs of many insurers (158 companies have expenses of less than 1 million UAH per year), as well as the high level of outbound reinsurance (more than 90% in 10 companies, of which five companies are in the top 15). «These are markers indicating the use of insurance companies for the purpose of tax evasion. Of course, these are only markers. To be sure, it is necessary to track the activities of such insurers for at least three periods, we only have point data for now,&rdash; explained a market representative who wished to remain anonymous.
According to one of the market participants, «schemes» in insurance are used mainly within corporate groups, but insurers are not ready to say which of their colleagues is engaged in such activities.
The commission says that each case of reinsurance must be studied individually. «A high level of outbound reinsurance can occur when insurers purchase mandatory coverage for a year. It is necessary to look at each company separately. It may be that a normally operating company has an increasing level of outbound reinsurance in certain periods. It is also necessary to remember that the submitted reports were not audited, so there may be adjustments», – added Mr. Zaletov.
In addition, insurers are used in schemes only because the legal system and business climate contribute to this. «There are companies, looking at whose reports you understand that this is more like «schematosis». To prevent this from happening, the country should have a single general taxation system. Then it will not be profitable for anyone to use schemes», – believes Vyacheslav Chernyakhovsky.
According to Oleksandr Zaletov, low payroll expenses – are a signal for the State Fiscal Service. «If an insurance company does not violate regulations and has no complaints, then our functionality is limited. If the company does not pay taxes, then this is a matter for other bodies. The situation needs to be considered for each individual company», – he emphasized.
Experts say that the published data will improve the understanding of the market situation by consumers of financial services. «This is certainly a breakthrough. At this stage, we would still need to get a figure for the insurer's income from incoming reinsurance operations, and we could single out the so-called direct insurance. But for an initial rough analysis, this is enough for the consumer to understand who he is dealing with and whether there are risks of revoking the company's license due to "inconsistent activities" or involving the insurer in long legal proceedings with the authorities,» says Galina Tretyakova, general director of the Ukrainian Insurance Federation.
Source: Financial Club
Author: Palchevsky Ivan
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