What guarantees that the insurance company will carry out of the obligations to clients?

For today, the state exercises rigid control over activities of the insurance companies, the biggest part of the Law of Ukraine «On Insurance» concerns questions of reliability and solvency of insurers. Only to begin insurance activity the company should have an authorized capital in the significant amount which is now established by the Law at 1.5 million Euro, and such monetary investments can testify to serious intentions of investors in relation to their businesses, as they completely bear responsibility with this sum to clients of the company. As for reference, the authorized fund of IC "TAS" more than 2 times exceeds legally established minimum and is equal to UAH 21.3 million.

The following element of the insurer’s reliability "guarantee" are life insurance reserves which as set out by the law should exceed the obligation of the insurer to the clients for any date, at least by 5%. Such reserves are not property of the insurer and should be placed in view of diversification, liquidity, safety, and profitableness. This means that the insurance reserves can be invested only in the most reliable actives, their exhaustive list is specified in the Law: money resources on the current account or in cash department; bank contributions (deposits); currency investments; real estate; bank metals; actions, bonds, hypothec certificates; securities emitted by the state; the rights of claim to reinsurers; investments into economy of Ukraine in the fields set by the Cabinet of Ministers of Ukraine.

Compliance with the above legislative requirements is supervised by the State commission on regulation of the markets of financial services of Ukraine which periodically receives the detailed reports of the insurer and checks correctness of application by the insurance company of Ukrainian laws and accuracy of reporting on the indices which characterize performance of insurance contracts. In case of infringements the Commission has powers large enough, beginning from cancellation of the certain actions of the insurer (orders, agreements, etc.) up to making changes in the company management or assignment of a state managing director.

The following level of guarantee is also the fact that conditions of insurance, insurance programs and insurance tariffs of the company on life insurance passed full check and were approved by a competent body which carries out the state supervision of insurance activity. Even more, as the insurance company offers long-term services intended for tens of years, it cannot give to the clients any promises with dubious guarantees. So the life insurance company cannot guarantee the investment income more than 4% annual. However it does not mean that clients should be satisfied with such low income. The law provides that the company is obliged to give the client at least 85% of the real income received on results of the relevant year. AS reference, on 2003 results the IC «TAS» provided to clients the total investment income at a rate of 14.58 % annual in hard currency, 12.14% in 2002, and 12.46% in 2001.

These and the majority of other guarantees are directly stipulated in the Legislation and supervised by the state, however the question of guarantees is much more wide and depends on many other factors.

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