Efficiency of the functioning of the Ukrainian insurance market

Abstract

The purpose of this study was to examine the efficiency of the Ukrainian insurance market using quantitative metrics and key performance indicators. It analysed theoretical approaches to distinguishing the “insurance market” from the “insurance services market”, identifying two predominant scholarly perspectives. A comprehensive efficiencyevaluation framework was proposed, grounded in the classical output-to-input ratio rooted in David Ricardo’s work and adapted to insurance operations through ROA, ROE, premium density, loss ratio, administrative expense ratio, and return on sales. Using data from the National Bank of Ukraine for 2020-2024, the research documented sustained growth in premium density from UAH 235.1 to UAH 816.6, with the non-life segment reaching UAH 861.0. ROA was volatile, peaking at 6.8% in the non-life segment in 2022, while ROE surged to 22.2% in 2022 before moderating. Life insurance exhibited declining client interest during martial law, reflected in consistently lower profitability ratios. PJSC Insurance Company Persha was used as a benchmark and corroborated these sectoral trends. Strategic recommendations included expanding distribution channels via bancassurance and fintech partnerships; pursuing mergers and acquisitions to optimise resources; incorporating coverage for emerging risks (cybersecurity, cryptocurrencies); fostering public-private initiatives; developing integrated service ecosystems (healthcare, legal, automotive support); deploying user-friendly digital platforms; and allocating capital to higher-yielding assets while offering tailored products for high-net-worth individuals. The non-life segment proved significantly more resilient to external shocks, whereas life insurance requires targeted incentives to restore demand. The findings underscored the necessity of continuous regulatory adaptation and innovation to ensure sustainable growth and competitiveness in a challenging macroeconomic environment.