Insurance companies in Ukraine currently do not consider the insurance history of clients when calculating the cost of auto liability insurance, as stipulated by the law on mandatory insurance of civil liability of owners of land vehicles (OSAGO), which comes into effect on January 1, 2025.
This was confirmed by a survey conducted by the "Interfax-Ukraine" agency among leading insurers in this market.
Access settings for a complete insurance history of clients (beyond a single insurer) are still ongoing, which is why insurance companies base their policy agreements solely on their own insurance history with the client, stated the General Director of SK "Guardian", Tatyana Shchuchyeva.
She also added that insurers expect such access soon from the centralized database of the Motor (Transport) Insurance Bureau of Ukraine (MTIBU).
According to the CEO, as of January 10, the cost of a policy for passenger cars with an engine capacity of up to 1600 cc for registered vehicles ranges from 2,500 UAH - zone 5 (small settlements – IF-U) to 5,000 UAH - zone 1 (Kyiv - IF-U), while for unregistered vehicles the price starts at 9,600 UAH.
The Director of the Retail Products and Services Development Department at SK "INGO", Olga Ivantsova, confirmed that insurers are actively working in this direction. "It is still unknown how banks, marketplaces, and aggregators, which deal with a range of insurers and must adapt to all, will react to such changes. Therefore, the cost of policies from the same insurer may differ across various platforms," she noted.
Ivantsova also clarified that when calculating the cost of the "INGO" policy, previous insurance experience is considered, meaning a bonus-malus system is applied. However, leading insurers will definitely gather more information about the client, allowing for deeper segmentation. For example, "INGO" plans to consider criteria such as the total mass of the vehicle and others.
"The more information we have about the client, the better we can implement the principle of an individualized approach. In most cases, this means a reduction in policy costs," she stated.
According to Ivantsova, since the beginning of the year, depending on the category of the vehicle, the region of operation, and engine volume, the cost of the policy at "INGO" has increased by 50% to 70%.
As stated by the Director of Commercial Activities at SK "Express Insurance", Ekaterina Lukashenko, the insurance history of clients is an important factor that is gradually being integrated into the process of forming OSAGO policy costs. The company is already using this data for legal entities and is also working on improving approaches to consider this factor for individuals.
The issue of accounting for the client's insurance history is one of the most debated topics in the OSAGO sector, notes Elena Masharo, advisor to the Chairman of the Board of NASC "Oranta".
According to her, the main principle of this type of insurance is that all insured car owners – both those who are at fault in accidents (a minority, about 2.5% per year) and those who have not caused accidents – jointly form a fund from which payments are made to those injured in accidents. If those without accidents pay significantly less than those at fault, the basic payment to ensure a sufficient fund size will have to be significantly increased compared to the current level, where discounts for accident-free driving are not taken into account. This is why the company is currently seeking an optimal model that would allow for fair and effective accounting of insurance history.
In SK ARX, they also do not currently consider the client's insurance history when determining prices but plan to introduce this factor in the future when calculating payments.
"We were the first to introduce and will continue to use factors for calculating payments, such as the age of the owner (individual) and the age of the vehicle. The longer the driving experience, the cheaper the auto liability policy," the company stated.
They clarified that this practice has existed in Europe for many years. For example, in Germany, insurance premiums can vary by eight times. One person may pay EUR 100, while another pays EUR 800.
When asked how much the average loss amount might increase after the new law, aimed at protecting insurance consumers, comes into effect, Ivantsova replied that the frequency of damage claims is expected to rise by about 10%, as the claims process has now become much clearer and faster. Clients will no longer have to navigate a complicated route through the insurance company of the other party involved in the accident, which lowers the barrier for submitting claims. Regarding the average payout amount, "INGO" predicts it will more than double.
"We also expect an increase in payout levels across the market as a whole. Previously, this figure fluctuated between 40-50%, but now it could rise to 60% or even higher. This is due to insurers settling losses more promptly, and the new OSAGO contract conditions providing for higher compensation levels than before," noted the Director of the Department at "INGO".
As Shchuchyeva reported, the average loss amount in the market for the 11 months of 2024 was 33,000 UAH. "We predict it will double, occurring gradually throughout 2025," she said.
Masharo also agrees that the payout amount to victims will increase. According to her forecasts, for a single insurance case, it could reach 50,000-60,000 UAH. Accordingly, an increase in payout levels is also anticipated.
"However, this is just the beginning, and there are still many uncertainties and changes ahead. We hope that these innovations will yield positive results for all road users and for the further development of the insurance market in Ukraine," she emphasized.
In "Express Insurance", they predict that this growth will be gradual throughout 2025, as a significant number of motorists will still have policies concluded in 2024. By the end of 2025, the average policy amount for OSAGO may increase by 70-100% compared to the previous year.
According to their data, the increase in the average payout amount, in addition to the factors that will come into effect with the new law, will also be influenced by the specifics of the company's portfolio. The average payout for insurers with a predominance of new vehicles (up to five years old) may be 15-20% higher than for companies with older vehicles in their OSAGO portfolio. This is because new vehicles are typically serviced at authorized service centers, where repair costs may be higher than at regular auto service stations.
According to forecasts from SK ARX, with the introduction of new auto liability conditions, the average payout amount will increase by 57%. In "European Insurance Alliance", they believe it will rise to 55,000-65,000 UAH.
When asked if insurers have data on what percentage of clients have policies from 2024 based on the old law and in 2025 based on the new law, "Express Insurance" responded that, according to their forecasts, by July 1, 2025, about 57% of the company's active policies will still be issued under the old terms.
In "Oranta", they clarified that since OSAGO contracts under the new law have only just begun to be concluded, it is natural that at least 95% of car owners have policies issued in 2024. That is why 2025 is a transitional year for OSAGO, during which insurance contracts will operate under both the new and previous law conditions.
The surge in auto liability sales that occurred last December was indeed linked to clients' desire to purchase a policy at the old price, confirmed the General Director of SK "Guardian", Shchuchyeva.
"According to our statistics, this was primarily done by clients whose insurance policies end in January-February 2025. The share of clients who postponed the extension of their policy accounts for no more than 5% of total sales for the year," she emphasized.