The number of auto theft claims grew fivefold over the past six months

Sellers CASCO contemplating how not to pay auto thefts

Photo: Konstantin Melnitsky

Over the first half of the year, the number of stolen car claims increased fivefold compared to the same period of the previous year, informed representatives of several major players on the vehicle insurance market in Ukraine. “We received five times more car theft claims this year than in the first half of the past year,” CEO of Universalna Insurance Company Oleksiy Muzychko told Capital.

Switching back to old cars

Insurance companies say the situation in the Donbas is the main reason for growth of car theft claims. “In the ATO zone, not only the number of stolen car claims, but also the general number of claims from the insured, more than doubled,” admits Muzychko. At that, the issue of car theft is not limited to the ATO zone. “The rise in car theft claims in our company is more than five times, but I cannot attribute it to the situation in Donbas. There are more car thefts all around Ukraine – many claims came from the Odesa, Cherkasy and Chernihiv oblasts,” says CEO of TAS Insurance Group Pavlo Tsaruk.

The insurers so far cannot explain the growth of car thefts in Ukraine. “There could be different reasons, because the country is essentially in a state of war. There have been cases, however, when the owners of vehicles used as a pledge for a loan hid their cars and filed stolen car claims in order to use the insurance indemnity to repay the loan,” continues the expert. At that, he admits that there are not that many such cases of fraud.

The insurers note that SUVs are the most popular vehicles among carjackers. “Many residents of the Donetsk and Luhansk oblast either hide them in garages or switch to old Moskvich or Zhyguli models in order to prevent theft of their expensive cars. That is why the number of insured vehicles in this region is declining, because there is no sense in insuring old cars,” says President of the League of Insurance Organizations of Ukraine (LIOU) Oleksandr Zaletov.

The curve is moving down

So far it is hard to tell by how much the volumes of CASCO insurance (comprehensive insurance) in the ATO zone decreased, but overall the car insurance market sunk 25% over the first half of the year, according to estimates of the LIOU. The insurers are less optimistic. “The CASCO portfolio could shrink by more than 40%,” believes Vice Chairman for Sales of the Nova Insurance Company Lina Kravchenko. The main reason of declining interest in CASCO is of economic nature: the sales of new cars are not growing, cars are getting older, there is no active car lending and people’s incomes have decreased. “Today, people spend their money on necessity goods and insurance is not one of them,” stated Kravchenko.

At that, according to AUTO-Consulting, sales of new cars grew in June by 2.6 times compared with May. The insurers call this growth situational. “Most likely, the increase in sales was due to postponed demand – people who wanted to buy a car in May were waiting for the results of the elections,” believes Tsaruk. According to his forecasts, the volumes of new car sales are unlikely to increase by the end of the year and therefore one should not expect that CASCO insurance will grow.

Indemnities on the rise

In the first half of the year payments of insurance benefits on CASCO increased by 10-15%, reported LIOU. At that, the number of claims grew, on average, by 20-25%. The insurers are not in a hurry to cover the claims mainly due to the situation in Crimea and Donbas, believes Zaletov. “Claims from Crimea are submitted, but the indemnities are rarely paid out due to the problems with the documents, which the insured must gather on the peninsula as the Russian government authorities cannot issue the documents specified in the agreements of Ukrainian companies,” says Zaletov. “Meanwhile, the situation in the ATO zone requires government’s intervention.” He says that all normative acts regulating payment of indemnities in this zone on mandatory types of insurance (for instance such as mandatory insurance of civil liability of a vehicle owner, accident insurance of passengers of public transport, insurance of dangerous cargo) must be brought to a single standard by the Cabinet of Ministers.

“As for voluntary types of insurance, the regulator should issue a single explanation for insurance benefits in this zone for everybody so that we don’t witness an increase in the number of lawsuits,” believes Zaletov.

Muzychko says there have already been precedents of court claims against insurance companies for non-payment of CASCO coverage in the ATO zone and many insurers are waiting for the results of court trials in order to use them in their operation. In its turn, LIOU is drawing up statistics of payout of indemnities in the ATO zone and market offers and is planning to submit the collected data to the National Financial Services and Stock Exchange Committee by the end of the week so that the regulator can make a decision on this issue.