In Ukraine, the draft law “On the system of military risk insurance”, developed by the NBU, was presented
In Ukraine, the draft law “On the system of military risk insurance” developed by the National Bank of Ukraine in cooperation with the Ministry of Economy and the Ministry of Finance was presented. This document proposes the introduction of a nationwide system of insurance against war risks to protect the interests of citizens and businesses.
Basic provisions of the war risk insurance system
The draft law is aimed at providing compensation for losses that may arise as a result of the implementation of military risks in Ukraine. The main goal is to protect the property interests of both individuals and legal entities that have suffered as a result of hostilities.
The Ministry of Economy notes that the lack of insurance against war risks is a significant obstacle for attracting investments in the reconstruction of the country. Therefore, it is important to create a unified insurance system that will stimulate economic development and attract investors.
Financing the system and creation of the State Agency
The proposed system will be financed by mandatory insurance payments, as well as with the support of international donors. Separately, the draft law provides for the creation of the State Agency for Military Risk Insurance, which will form general standards for risk assessment, develop insurance products, implement a centralized pricing system, and maintain a single database.
Risk coverage and mandatory insurance
The system will include coverage for physical damage caused by war. In particular, mortgaged property and residential facilities under construction will be subject to mandatory insurance. Currently, consultations are being held regarding the possible expansion of the list of mandatory insurance objects.
The draft law is planned to be submitted to the specialized committee of the Verkhovna Rada by the end of December this year, taking into account the proposals of businesses and insurers.
Current insurance instruments
The Ministry also reminded about the already existing mechanisms on the market. For example, the Unity program for ship insurance, where the government took over the coverage of the first risk, which made it possible to lower insurance rates and activate the market.
Oleksiy Sobolev, First Deputy Minister of Economy, emphasized that there are already successful projects with MIGA and DFC, as well as the first war risk insurance contract for an investment loan from the Export Credit Agency. The goal is to combine all existing programs into a single pool and attract international reinsurers to create transparent and understandable market conditions.
In addition, the Cabinet of Ministers approved the list of military and political risks, as well as the terms and conditions of insurance (reinsurance) of military and political risks during the activities of the Export Credit Agency (ECA). The relevant decision was adopted at a meeting of the Government on April 9, 2024.
“Increasing the instruments of insurance of military and political risks during the war in Ukraine should contribute to the attraction of investments in the Ukrainian economy already now. The adoption of the government resolution is aimed at this. It will allow to improve the legal regulation of the list of military and political risks, conditions and procedures for insurance of investments against military and political risks in the implementation of activities of the Export Credit Agency. EKA will be able to insure and reinsure against military and/or political risks investment loans of Ukrainian banks for Ukrainian exporters, as well as direct investments. This will provide support for Ukraine’s economy, stimulate the recovery of industrial production, create new jobs, fill budgets at all levels with funds from tax payments and strengthen the state’s defense capabilities,” explained Deputy Minister of Economy of Ukraine Volodymyr Kuzyo.
This mechanism will make it possible to eliminate the gaps that limit the possibility of insuring domestic investments of EKA, including in the conditions of military actions and post-war reconstruction.
FAQ
What is the national war risk insurance system?
The national war risk insurance system is a system that provides for the protection of the insurance interests of individuals and legal entities, providing compensation for losses caused as a result of the war in Ukraine.
What is the purpose of creating this system?
The purpose of the system is to overcome obstacles to attract investment in the recovery and development of Ukraine’s economy, as well as to protect the interests of citizens and businesses affected by the war.
How will the war risk insurance system be financed?
Financing will take place at the expense of accumulated mandatory insurance payments, as well as financial assistance from international donors.
What is the State Agency for War Risk Insurance?
This is a special body that will be responsible for developing a risk assessment and acceptance policy, standardized insurance products, a centralized pricing system, and maintaining a single database in the war risk insurance system.
What property will be subject to compulsory insurance?
Compulsory insurance will cover property pledged, i.eand objects of residential construction. The list of objects can be expanded after consultations.
When is the bill to be submitted to the Verkhovna Rada?
The draft law is planned to be submitted to the specialized committee of the Verkhovna Rada by the end of December this year after taking into account the proposals of the business community and representatives of the insurance market.
What war risk insurance instruments are already in force in Ukraine?
The Unity mechanism for ship insurance already operates in Ukraine, as well as successful projects with MIGA, DFC and the Export Credit Agency.