Reform Index 198: Liability insurance in place of fire inspections

Law on business civil liability insurance in place of fire inspections, +2.0 points

Law 2655-IX became another step in the direction of deregulating business and aligning Ukrainian laws with European legislation.

Twenty years ago, the Cabinet of Ministers adopted Resolution No. 1788, introducing mandatory insurance of business entities’ civil liability for damages caused by fires and accidents at high-risk facilities. However, no such mechanism existed for small- or medium-risk enterprises. 

The new law allows them to voluntarily replace fire and technogenic safety inspections with insurance. In that case, the checkouts will occur once every ten years for insured entities of insignificant risk and once every six years for medium-risk ones.

This means fewer contacts with controllers for businesses; an opportunity to reduce corruption risks, optimize the staff, and save money for the State Emergency Service; and guaranteed damage coverage by the insurance companies for the state. Previously, the burden fell mainly on local and state budgets. The perpetrators often could not make up for the state’s expenses due to bankruptcy or avoided it through court proceedings.