COUNTERING FRAUDULENT PRACTICES AS A FACTOR IN RESTORING TRUST IN THE INSURANCE INSTITUTION

Abstract

The study analyzed the factors in restoring trust in the institution of insurance, namely the establishment of a unified state system for recording detected cases of insurance fraud and consolidated databases of high-risk entities. It is noted that the insurance market has undergone a complex path of development, evolving from chaotic cooperative practices to the implementation of high-quality insurance programs in line with international standards. The negative experience of its formation reflects systemic problems inherent in the transformation of a transitional economy. The operation of a significant number of companies under conditions of weak state control contributed to the spread of fraudulent practices and the erosion of trust in the insurance institution. The research identifies the main problems of the contemporary insurance market, including unfair competition, the absence of development strategies, unlawful capital outflows, and tax evasion. Particular risk areas remain in auto, health, social, and property insurance, where numerous cases of fraud are widespread. The absence of a unified database on fraudulent activities and high-risk entities is established as a key reason for these processes. The existence of a centralized system could serve as an effective instrument for preventing violations and enhancing market transparency. The study proposes the creation of a publicly accessible register of insurance fraud that would consolidate information about dishonest client and their accomplices. Trust is defined as a key factor in the functioning of the insurance sector, as it shapes customer loyalty, reduces the risks of fraud, and strengthens the reputational stability of insurance companies. It is determined that the effectiveness of insurers’ activities directly depends on financial stability, liquidity, business activity, and profitability. The effective development of the national insurance market is deemed impossible without comprehensive regulation, the creation of a unified information security space, and the strengthening of trust as a strategic resource for sustainable growth.