Life insurance can become a source of long-term funds for economy - NBU

First Deputy Governor of the National Bank Kateryna Rozhkova said this during a meeting with representatives of life insurance companies and industry associations, Ukrinform reports citing the National Bank's press service on Facebook.

"Ukraine has the potential to develop this segment of insurance [life insurance], which can be a significant source of long-term funds for the economy," she said.

According to Rozhkova, the global ratio of life insurance premiums to GDP is 2.7%. For developing countries, this figure is 1.6%, while in Ukraine it remains at 0.08%.

"Life insurance premiums in the global market account for about 41% of annual total insurance premiums in 2023, while in Ukraine, over the same period, they amounted to 11.1%," the official said.

Rozhkova said that the NBU, together with market participants, is working to develop a future model of the life insurance market. The life insurance market in Ukraine is currently represented by only 12 insurance companies. They work with various accumulative and risky life insurance products.

"Endowment insurance can be an effective tool that combines insurance of risks inherent in human life with an investment component. However, in today's realities, the demand for such products is low," the expert said.

According to Rozhkova, changes in this segment are possible subject to the overall stabilisation of the economy, development of the capital market and improvement of the welfare of citizens.

At the same time, the NBU representative added, risky life insurance is of particular importance under martial law, performing an important social function. As insurance payments under a life insurance contract, unlike health insurance, provide financial protection for the budget of a family left without a stable income after the death or disability of the insured person who is the breadwinner of such a family.

Rozhkova emphasised that the National Bank of Ukraine sees potential in standardised life insurance products available through digital channels, and is also considering the possibility of involving private insurers in the social insurance system.

"Simple standardised accident and occupational health insurance products may be of potential interest to employers," Rozhkova said.

As reported, in March, the NBU noted the growth of the life insurance market in the fourth quarter of 2023.