TRANSFORMATION OF THE INSURANCE MARKET UNDER MARTIAL LAW: RISKS, ADAPTATION, AND DEVELOPMENT PROSPECTS

Abstract

The article examines the impact of wartime conditions on the functioning of the insurance market as a key component of the financial system. The study focuses on the transformation of the risk environment caused by military actions, which is characterized by a significant increase in uncertainty, the emergence of new types of risks, and the growing complexity of their identification and assessment. War-related risks such as large-scale property destruction, business interruption, and threats to human life and health are analyzed as systemic factors that are generally excluded from standard insurance coverage, thereby creating substantial gaps in financial protection mechanisms. The research investigates changes in demand for insurance services under conditions of armed conflict. It is determined that wartime leads to a noticeable decline in long-term insurance products, especially those with savings components, while simultaneously increasing demand for short-term and socially oriented insurance types. Health insurance, personal accident coverage, and other protective products become more relevant due to heightened uncertainty and risk exposure. At the same time, declining household incomes and overall economic instability significantly reduce the affordability of insurance services for both individuals and businesses. The article also highlights the main challenges affecting the financial stability of insurance companies. These include reduced inflows of insurance premiums, increased claims in certain segments, higher operational and administrative costs, and limited opportunities for investment activities. Maintaining liquidity, solvency, and balanced risk portfolios becomes a critical priority for insurers, forcing them to revise their strategic approaches and strengthen financial resilience. In response to these challenges, the study outlines key directions of adaptation within the insurance market. These include accelerated digitalization of insurance processes, implementation of innovative technologies, simplification of customer interaction, and development of new insurance products adapted to crisis conditions. The growing importance of InsurTech solutions is emphasized as a factor of market resilience and competitiveness. The role of state regulation and international cooperation is also considered essential for supporting the insurance sector during wartime. The article concludes by outlining prospects for post-war recovery, including market modernization, reconstruction-related insurance demand, and further integration into the global financial system.