Cabinet to Create State Agency for Insurance and Reinsurance of War Risks
The Cabinet of Ministers of Ukraine will create the State Agency for Insurance and Reinsurance of War Risks. This is provided for by draft law No. 12372 “On the System of Insurance of War Risks”, which was registered in the Verkhovna Rada on December 30, 2024. The initiators of the document are a group of people’s deputies.
The state agency is being created in the form of a joint-stock company that will operate on a commercial basis. Its founders are the state represented by the Cabinet of Ministers, which will own at least 50% + 1 share. International financial organizations may also be among the founders, provided that their participation is previously approved by the National Bank of Ukraine.
The general meeting of shareholders, the supervisory board and the board are designated as the management bodies of the agency. The supervisory board consists of at least five members, including independent ones, and is formed for a four-year term. Representatives of international financial organizations may be members of the board, but one person may not hold this position for more than two terms.
The competence of the supervisory board includes the coordination of the financial plan, control over the implementation of risk management functions, internal audit, approval of the organizational structure of the agency, as well as the list of authorized insurers and intermediaries.
The quantitative composition of the board is established by the supervisory board, but cannot be less than three people. The board includes the chairman, his deputies and members of the board, who are elected by the supervisory board. The board manages the current activities of the State Agency.
According to the draft law, the participants in the war risk insurance system are policyholders, authorized insurers, as well as insurance intermediaries and insurers who have the right to provide intermediary services, non-resident reinsurers, and the State Agency.
It is also proposed to introduce three-level war risk insurance.
At the first level of the system, unless otherwise established by the procedure for insurance of war risks, obligations under the insurance contract within the limits of its own retention are borne by an authorized insurer, which transfers to the State Agency for reinsurance obligations under the insurance contract that exceed the limit of its own retention.
At the second level, the State Agency is responsible for insurance contracts within the limits of its own retention, and transfers excess risks for reinsurance to international reinsurers through outbound reinsurance (cession or retrocession).
The third level provides for the reinsurance of risks by non-residents. Their liability is determined by the terms of reinsurance contracts and the established limits of their own retention.
The proposed structure is aimed at effectively distributing risks between the participants of the system and attracting international partners to ensure the stability of war risk insurance.