Financial Implications of Price Disparities in Motor Insurance: a Cross-National Analysis of Ukraine and the EU

Abstract

Price disparities in motor insurance create financial inequality and hinder the effective performance of insurance, undermining its social function. The harmonization of insurance standards with EU regulations has changed the pricing systems, intensifying the rapid rise in policy costs in Ukraine. The article aims to analyze the financial implications of price disparities in motor third-party liability insurance (MTPL) by developing original indicators of economic pressure on Ukrainian households and conducting a cross-national comparison with European Union markets to substantiate strategies for harmonizing insurance policies. The empirical analysis covers 2021–2024 and applies statistical, comparative, and economic-mathematical methods. The study justifies the need to assess consumers’ financial capacity and proposes the use of the Insurance Burden Ratio on Wages and the MTPL Insurance Affordability Index, reflecting an original approach that accounts for income levels, vehicle fleet age, and policy costs. The scientific novelty lies in the quantitative assessment of price disparities in motor insurance using these developed indicators. The findings reveal that the rising cost of insurance policies in Ukraine imposes an excessive financial burden on households. In contrast, the European Union’s motor insurance market exhibits significantly lower price disparities, with economic conditions ensuring greater insurance affordability. The practical significance of the study lies in the potential for state regulators and insurers to utilize the proposed indicators to refine tariff policies and align them with European standards, thereby fostering a socially efficient, accessible insurance market that supports the achievement of the United Nations Sustainable Development Goals.