The Verkhovna Rada Supports Auto Insurance Reform: Key Provisions

by Roman Cheplyk
Tuesday, May 21, 2024
The Verkhovna Rada Supports Auto Insurance Reform: Key Provisions

The Verkhovna Rada of Ukraine has approved draft law No. 8300, titled “On Mandatory Civil Liability Insurance for Owners of Land Vehicles.”

The law was passed with 294 votes in favor during its second reading, as announced by Yaroslav Zheleznyak, the first deputy head of the Verkhovna Rada Committee on Tax and Customs Policy and a People's Deputy from the "Voice" faction.

Key Provisions of the Law

The law aims to make auto liability insurance more effective through several key reforms:

  1. Increase in Insurance Sums:

    • The law proposes a gradual increase in the maximum amounts of insurance payments to align with the amounts established in European Union countries. This adjustment aims to enhance the financial protection for those involved in road accidents.
  2. Quick Implementation of Guarantee Payments:

    • To ensure quicker compensation, the law mandates that payments to injured parties from bankrupt insurers be processed within 90 days, a significant reduction from the current timeline, which can extend to several years.
  3. Introduction of Direct Settlement:

    • The law introduces a direct settlement mechanism for all road accident cases where only the vehicle is damaged. This allows the injured party to claim insurance payment from their insurer, even if the at-fault driver is uninsured.
  4. Expansion of the "European Protocol":

    • The law expands the use of the "European Protocol," which allows for the filing of an insurance compensation claim without involving the police, streamlining the process for minor accidents.

Zheleznyak mentioned that further important amendments for the insurance industry would be added to the legislation by the specialized committee in the near future.

Background and Implications

The relevant draft law was initially approved by the Verkhovna Rada as a basis at the beginning of 2023. The new provisions are expected to modernize Ukraine's auto insurance system, bringing it closer to European standards, and provide better protection and faster compensation for victims of road accidents. This reform is part of broader efforts to improve the regulatory framework and efficiency of the insurance industry in Ukraine.

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