STATE REGULATION AND ITS IMPACT ON THE INSURER’S INTERNAL CONTROL SYSTEM

Abstract

An important role in the economic system of any country belongs to the state, the main function of which is to regulate the economic activities of all business entities. Therefore, the successful development of any industry, in particular the insurance industry, largely depends on effective state regulation. This regulation is carried out taking into account the specifics of insurance, which are determined by the economic nature of insurance and provide for insurance protection and risk distribution among all its participants. Establishing clear requirements for the insurer’s management system is an important stage in ensuring proper control, which covers not only financial stability but also the ethical and legal aspects of companies’ activities. Defining standards and control mechanisms allows for ensuring stability and transparency in the market, which contributes to customer trust and the development of the industry. In this context, internal control of insurers acquires particular importance, since its task is not only compliance with regulatory requirements but also the timely identification and management of potential risks. Therefore, the creation of an internal control system that meets modern requirements is the basis for maintaining the financial stability of an insurance company and the ability to fulfill obligations to customers. Ensuring an adequate level of internal control helps the company not only comply with national and international standards but also minimize the risks that may arise in the process of its activities. This, in turn, strengthens overall economic stability and contributes to the stability of the entire insurance market. 
The article examines state regulation and its impact on the insurer’s internal control system. This issue is relevant in the context of increasing requirements for the financial stability of insurance companies, the need to comply with regulatory standards and implement effective risk management mechanisms; determining the criteria for the significance of insurers; and indicating financial institutions that are supervised by the National Bank of Ukraine. The definition of «corporate governance» is analyzed, which establishes a company’s goals and methods of achieving these goals. It is established that at the global level, an effective internal control system is based on international standards that are recognized and applied in various industries, including insurance. A set of measures is proposed that will contribute to increasing the reliability, transparency, and efficiency of the insurance company’s activities, as well as ensuring the timely detection and elimination of violations of the law. 
Therefore, scientific research into the processes related to state regulation and its impact on the insurer’s internal control system is relevant and significant for all its participants.