During the last decade Ukrainian insurance market developed quite rapidly, which has attracted a lot of players to this industry (now there are more than 450 companies operating insurance businesses in Ukraine), including those with foreign capital (over 100 companies). However, the economic recession and the lack of necessary reforms and legislative changes significantly slowed the momentum for further growth. Despite the fact that the insurance market has returned to its pre-crisis positions, many companies are still experiencing difficulties.
What has been and still remains to be the main challenge is capitalization of insurance companies and the lack of consumer confidence. Inundated by unscrupulous players that do not have the necessary reserves for insurance and do not fulfil their obligations to customers and partners the industry is at a very high reputational risk, countering which is detrimental to all companies. Other negative factors affecting activities of any insurance company in the country are price wars, significant administrative costs, problems with reinsurance, bad risk management policies, personnel shortage, out-dated tax system, the use of insurance companies in the "optimization" schemes, the lack of international practice standards and so on.
Never the less, this sector still holds a lot of potential in Ukraine due to the fact that many types of insurance have not been sufficiently developed here just yet. Such as, first of all, mandatory health insurance and the insurance of agricultural risks, which are going to be introduced once an adequate legal framework to support them is in place.