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With the advent of different forms of ownership, many enterprises have come

out of the state's financial protection. Prior to the writing of this Law, all costs
associated with an accident were borne by the enterprise where the incident occurred.
That is, the labor collective was left alone with its problems because the
financial capabilities of small businesses are insignificant. The practice has shown
that in such situations, some of them were quickly eliminated, leaving the victim and
his or her family without any assistance, some of them becoming bankrupts, and
people working there - unemployed, other businesses taking loans, getting into long-
term debt with all the negative consequences, that follow.
The reason is one: injuries are the only thing that cannot be planned in
business, and most businesses, in principle, could not accumulate sufficient insurance
resources in the event of these emergencies.
The same was true for large and medium-sized enterprises with high levels of
occupational risk (coal, mining, chemical, and other industries) who were unable to
bear the full burden of payments to victims or their families. Providing them with
assistance from businesses in other industries is long-standing world practice.
Therefore, the system of compensation for damages directly to the victims of
the enterprises, which was used earlier, was extremely flawed in legal, organizational
and social terms (Figure 1.2).

In 1999, in accordance with the Constitution of Ukraine, the Law of Ukraine
"On Labor Protection" and the legislative framework on mandatory state social
insurance the Law of Ukraine "On Mandatory State Social Insurance against
Industrial Accident and Occupational Disease which Caused Disability” was adopted.
(now: the Law of Ukraine “On Mandatory State Social Insurance”).
This Law defines the legal basis, economic mechanism and organizational
structure of compulsory state social insurance of citizens against industrial accidents
and occupational diseases that caused disabilities or industrial deaths.

Scope of the Law
This Law applies to persons working under the terms of an employment
agreement (contract) and to individuals-entrepreneurs.

Social insurance is carried out on the principles:
1) the legislative definition of the conditions and procedure for the
implementation of social insurance;
2) mandatory insurance of individuals in accordance with types of social
insurance and the possibility of voluntary insurance in cases provided for by law;
3) state guarantees of realization by the insured persons of their rights;
4) the mandatory funding by the Fund for costs associated with the provision of
material resources, insurance payments, and social services, in the amounts provided
for by this Law;

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