Insurance During Wartime: The Market Is Growing on Paper but Contracting in Reality

Time for Action has analyzed the situation on the insurance market in 2025 and identified a contradictory picture: formal growth in premiums is combined with a decline in the number of contracts, rising policy costs, and reduced accessibility of insurance for citizens and businesses. The market is moving, but not expanding it is becoming more expensive and more concentrated.

During the first nine months of 2025, the total volume of insurance premiums increased by 4.2% compared to the same period of the previous year, adjusted for inflation and excluding the sharp rise in compulsory motor third-party liability insurance payments. Formally, this appears positive. However, the number of concluded insurance contracts decreased by 24.8% to 18.6 million. This is not a temporary fluctuation but the continuation of a long-term trend: in the first nine months of 2025, nearly twice fewer contracts were signed than in the same period of 2023. The most visible changes occurred in the MTPL segment. Following legislative amendments that came into force on January 1, 2025, a new version of motor liability insurance was effectively introduced, providing full compensation for repair costs. MTPL premiums more than doubled from UAH 11.0 billion to UAH 23.6 billion and, according to industry estimates, may account for one-third of total market premiums. At the same time, the number of concluded MTPL contracts declined by 7.7%, or by 623,000 policies. Even the inclusion of combat veterans into mandatory coverage did not reverse the trend. Nominal revenues are increasing due to tariff factors rather than client base expansion.

A growing share of compulsory insurance in total premiums signals weak diversification. The greater the market’s dependence on mandatory products, the less developed the insurance sector is considered to be. In Ukraine, motor insurance classes account for 61.5% of the market, while life insurance represents only 8.1% of gross premiums. In European countries, life insurance typically accounts for 30% to 55%. This gap reflects a structural imbalance. In the life insurance segment, more than 80% of premiums are collected by foreign companies. Only ten companies operate in this market, and the Herfindahl-Hirschman Index exceeds the threshold indicating high concentration. Insurance penetration as a share of GDP has been declining over the past five years and remains significantly below 1%. Even taking into account the MTPL premium surge, the indicator will not exceed 0.8% of GDP. Ukraine has the lowest insurance penetration rate among Eastern, Central, and Southern European countries.

Another pressure factor is the rising cost of insurance services. The average cost of a CASCO, medical, or property insurance contract has increased 2.3 to 2.9 times compared to last year. Inflation, currency depreciation, rising medical expenses, higher repair costs at service stations, and reduced competition following the decrease in the number of insurers from 111 to 57 over the past two years have collectively driven price increases. Only 4.6% of individuals who purchased MTPL policies also hold CASCO insurance. Insurance is becoming less affordable for the majority of citizens.

Negative dynamics have affected nearly all classes of insurance. During the first nine months of 2025, endowment life insurance declined by 10.5%, CASCO by 47.6%, and medical insurance by 52%. The only segment showing growth in the number of clients is travel insurance, with contracts increasing 1.8 times to 2.2 million. This indicates higher outbound mobility but does not compensate for the overall contraction of the market. Despite challenging conditions, insurers continue to meet their obligations. During the first nine months of 2025, 3.3 million insurance claims were settled, with total payouts amounting to UAH 18.8 billion. Medical insurance accounted for the majority of claims 2.9 million cases. The increase in payouts is driven by inflationary and currency pressures, higher costs of spare parts and materials for vehicle repairs, and workforce shortages at service stations due to mobilization.

The Green Card and CASCO segments recorded a slight decline in payouts, while MTPL and life insurance saw growth. The increase in insured sums under MTPL reduced interest in simplified CASCO products: their number almost halved from 639,200 contracts to 335,200 over the comparable period. The market is currently in a complex transitional phase. The declining share of life insurance requires legislative adjustments. Without the development of this segment, pension and healthcare reforms cannot be effectively implemented. The dominance of motor insurance combined with the shrinking number of MTPL contracts highlights the need for strategic reorientation toward voluntary products and improved client offerings.

Ukrainians continue to insure themselves, but primarily through mandatory mechanisms. Voluntary insurance is shrinking, policy costs are rising, and accessibility is decreasing. The market is formally growing, but in reality, it is narrowing. This represents a challenge not only for insurers but also for public policy in the field of financial stability.

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