New rules for motor third party liability insurance from 2025: what will change and will prices rise
Kyiv • UNN
The NBU refutes myths about the new law on motor third party liability insurance, which will come into force on January 1, 2025. The law provides for a gradual transition to electronic policies and an increase in maximum payments to the European level.
On January 1, 2025, a new law on motor third-party liability insurance will come into force.
The National Bank of Ukraine debunks myths about the new law, UNN reports.
Details [1
Myth one: from the beginning of the year, “motor citizen” policies will immediately increase in price by 2-2.5 times
No, it doesn't. The new law does give insurers some freedom to determine the cost of the policy, which will depend on the driver's personal history. Thus, the price increase will primarily affect clients with a negative history of getting into an accident or belonging to the category of drivers who are more likely to be involved in an accident (for example, drivers with little driving experience or in large cities).
The scale of such an increase, according to preliminary estimates, will be about 25-30% in the highly competitive market. Importantly, the new law does not terminate existing policies but only applies to new ones. And for the privileged categories, the possibility of taking out a policy for 50% of its cost remains.
Myth two: paper policies will become invalid from the beginning of the year
No. The transition to the electronic format of motor third party liability insurance contracts will be carried out gradually. In just one year, from January 1, 2026, the final transition from paper to electronic policies is expected to take place with mandatory entry into the electronic centralized database of the Motor (Transport) Insurance Bureau of Ukraine. This will finally put the practice of concluding paper contracts in “vans” and numerous cases of fraud in the past.
Myth number three: the new law will significantly complicate the sale of policies
No. The NBU is determined to stop the semi-legal sale of policies at below-market prices, which has distorted competition for many years, and to fundamentally change the regulation of insurance intermediaries.
However, according to the NBU, most companies in the market are able to meet the new requirements, in particular in terms of consumer protection, and are ready to increase the number of customers by driving out unscrupulous players from the market.
According to the NBU, the new law should turn the popular insurance product from a formal piece of paper for the police into an effective tool for covering car owners' risks, as it contains such useful innovations:
Cancellation of the wear and tear coefficient and introduction of the principle that the insurance indemnity should ensure that the car is restored to the condition it was in before the accident;
Introduction of direct settlement of car damage caused by an accident, or the possibility for the victim to apply for insurance payment to his or her insurer;
Limitation of the deadline for the decision on insurance payment to 90 days and introduction of a penalty to the insurer for violation of such a deadline;
Abolition of the limit on the maximum amount of insurance indemnity under the European Protocol; payment by the MTIBU instead of the insurer whose license has been revoked, even before the relevant bankruptcy case is completed and the final liquidation is completed.
In addition, the new law should bring the Ukrainian insurance market a few more steps closer to European rules, as it provides for a gradual increase in the maximum amount of insurance indemnity to the EU level.
Starting from January 1, 2025, the ceiling on payments for damage to life and health will be increased to UAH 500 thousand, and to property - to UAH 250 thousand.
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