With a large land mass and a population of more than 46 million people, Ukraine is an important country with great potential, but significant challenges to overcome. Axco's newly published country report describes how standards in the financial services sector are gradually improving.

Political uncertainty ever since the presidential election in 2004, not immediately resolved by the 2007 parliamentary poll, has held back reform and new legislation. Economic development has remained strong, though privatisation of the large public sector is difficult because of numerous vested interests. Ukraine is increasing its links with the European Union and is hoping to join the World Trade Organization.

The country has a history of endemic corruption, but its financial sector is slowly becoming more transparent. Tax optimisation schemes continue to account for anything up to 70% of the non-life insurance market, but the State Commission for Regulation of Financial Services Markets (Derzfinposlug) reports a big reduction which was probably capital flight, rather than movement of genuine reinsurance.

Following a trend set by banks, several powerful European groups have acquired stakes in Ukrainian insurers in the last few years and seek to improve operating standards.

Motor casco and domestic and industrial property insurances are increasing, all driven by bank requirements on loan cover. If compulsory motor liability insurance were properly enforced, market premiums would rise substantially. The life insurance market is growing; good employers buy benefits packages, and citizens are more prepared to buy savings policies. For both non-life and life, Ukraine's insurance penetration and per capita spending are capable of acceleration from their present small base.