Functional aspects of the National Bank of Ukraine’s activities in the field of insurance market regulation

Abstract

The relevance of the study was due to the growing systemic role of the insurance market in the financial system of Ukraine and the need to increase the efficiency of financial supervision in the context of the concentration of regulatory powers in the National Bank of Ukraine. The purpose of the article was to substantiate the role of insurance market regulation as a component of a unified financial risk management system and to determine the management logic of the implementation of the regulatory, supervisory, control and protective functions of the central bank. The research methodology was based on a comprehensive analytical approach that combined systemic and structural-functional analysis with a comparative study of insurance regulation models in Ukraine, Poland, Germany, and Romania. As a result of the study, it was established that the insurance market of Ukraine performed a dual function of a financial shock absorber and an institutional investor, forming several channels of systemic risk through investment, group and behavioural connections with other segments of the financial sector. It was found that the objectives of state regulation of the insurance market – financial stability, solvency of insurers and consumer protection – formed a hierarchically interconnected risk management system, within which solvency acted as a functional condition of stability, and consumer protection – the basis of trust in the market. It was shown that the regulatory and supervisory instruments of the central bank were focused on preventive risk identification and differentiation of supervisory influence, but the practical effectiveness was limited by the heterogeneous financial capacity of insurers and the formalisation of risk management systems. The comparative analysis showed that in Poland and Germany, risk-oriented and proportional supervision was characterised by higher institutional maturity, while the experience of Romania demonstrated the risks of formal harmonisation of regulatory standards without proper institutional adaptation. The practical significance of the study was the possibility of using the obtained results to improve proportional and risk-based supervision, develop analytical tools of the regulator and increase the stability of the insurance market of Ukraine in the context of European integration.