The influence of financial-legal relations on the reinsurance market in Ukraine

Abstract

The purpose of this article is to investigate the impact of financial-legal relations on Ukraine's reinsurance market, which remains critically relevant amid the ongoing war and European integration efforts, as these relations shape regulatory frameworks, capital adequacy, and cross-border operations essential for market resilience. The war has intensified challenges such as currency restrictions and heightened risks, underscoring the need for robust legal mechanisms to ensure financial stability and attract international partners. The methodology encompasses a systematic analysis of legal acts, including Ukraine's Insurance Law and NBU regulations, combined with a quantitative assessment of market data from the National Bank of Ukraine, OECD, and Insurance Europe reports. This involved trend analysis, comparative evaluation of pre- and post-war indicators (2023-2025), and modeling potential scenarios for capital requirements under evolving financial norms. The results indicate a 38% decline in reinsurance premiums to foreign partners in 2023 due to currency controls, followed by a 16% recovery in 2024 and projected 20% growth in 2025 amid partial liberalization; reserves grew by 11% in 2024, but payouts to reinsurers remained low at 0.134 billion UAH, highlighting regulatory bottlenecks that increase vulnerability to war risks with global losses exceeding $20 billion. The practical value resides in offering policy recommendations, such as amending tax codes for reinsurance deductions, harmonizing with EU Solvency II standards, and establishing state-backed war risk pools, like Unity, which could enhance market capitalization, reduce dependency on foreign reinsurers, and facilitate Ukraine's EU accession by improving financial-legal alignment and investor confidence. Additionally, the study reveals that post-liberalization reforms in 2025 have led to a 32% increase in reinsurance payments in the first half, signaling improved risk transfer efficiency, while comparative analysis with EU markets shows a 20-30% gap in capital requirements, necessitating further legislative harmonization to boost cross-border collaborations and mitigate systemic vulnerabilities in wartime conditions.