National Bank Proposes Regulation of Insurance Agents: Draft Resolution Under Discussion

The National Bank of Ukraine is set to regulate the operations of insurance agents and brokers across the country.

A draft resolution pertaining to this matter has been made available for public discussion by the National Bank.

According to the National Bank, the newly enacted "Insurance Law" in Ukraine incorporates fresh regulatory approaches for overseeing the activities of insurance intermediaries. The implementation process will occur in two distinct stages.

During the initial stage, which is scheduled to commence on January 1, 2024, provisions resembling the current regulatory framework will take effect, albeit with certain refinements. The objective of this phase is to prepare the market for the adoption of new requirements that align with European practices.

The subsequent stage, starting from January 1, 2025, involves a comprehensive overhaul of the regulatory approaches governing intermediary activities in the insurance sector. National legislation will be adjusted to comply with the provisions outlined in Directive 2016/97/EU, issued by the European Parliament and Council on January 20, 2016, regarding the sale of insurance products.

Among the key innovations is the introduction of regulations, registration procedures, and heightened qualification and training requirements for all categories of insurance intermediaries, including insurance agents and employees involved in the distribution of insurance products.

Furthermore, there will be significant modifications in terms of the extent and necessity of information disclosure by insurance intermediaries to clients during the process of entering into insurance agreements.

To facilitate the implementation of the initial stage, the National Bank currently proposes the following provisions for public deliberation:

Expansion of the National Bank's regulatory oversight to encompass the activities of individual entrepreneurs engaged in insurance agent roles (presently regulated by a decree from the Cabinet of Ministers of Ukraine).
Enhanced opportunities for representative offices of non-resident brokers to handle the collection and remittance of insurance (reinsurance) premiums to the primary office of the non-resident broker.
Granting the National Bank the authority to exclude individuals associated with the aggressor country from the State Register of insurance and reinsurance brokers.
In addition, there is a proposal to establish fixed timelines for brokers to submit questionnaires and accompanying documentation to the National Bank, verifying their alignment with the requirements stipulated in the Regulations on the Registration of Insurance and Reinsurance Brokers, as well as the conditions for conducting intermediary activities within the insurance sector.

Upon adoption, the draft resolution is expected to remain in effect until January 1, 2025, coinciding with the enforcement date of Chapter XII, "Implementation of Insurance and Reinsurance Products," within the new Ukrainian "Insurance Law."

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