The export credit agency is ready to insure investments against war risks in Ukraine
The Export Credit Agency has received and is processing the first application for insurance of Ukrainian company’s investments against war risks, Chairman of the EKA board Ruslan Hashev told Ukrinform.
“This year’s main innovation is the launch of insurance programs against military and political risks. Such products are already in operation, we offer them to potential customers. We even received the first application for investment insurance from a Ukrainian company, which we are currently processing,” said Hashev. There are several more similar applications in the works.
“We are ready to work with Ukrainian and foreign investors within the framework of this program. Now we are developing expertise in the implementation of such products. We can already see certain aspects that may hinder successful implementation in the future. That’s why we are preparing proposals to make changes to regulatory documents to facilitate the access of Ukrainian and foreign investors, as well as Ukrainian banks that are ready to finance investment projects, given the risks of war,” said Hashev.
“A military risk is, for example, if your enterprise is hit by a drone or a missile, or debris arrives there that damages your production equipment, blocking operational activities for a certain time. This is when we talk about investment insurance. If we are talking about insurance of investment loans, we are talking about damage that led to the inability of the Ukrainian enterprise to repay the debt to the bank. Another military risk is occupation, if the front line is moving,” the head of EKA gave examples.
Political risk is, for example, if the company had a license and it was revoked, because of which it cannot continue operating.
As Foirnshurer reported, the ECA Supervisory Board introduced new products for the insurance of investments against military and political risks.
This became possible after the adoption of the Law of Ukraine “On Amendments to the Law of Ukraine “On Financial Mechanisms for Stimulating Export Activities” Regarding Insurance of Investments in Ukraine Against Military Risks.”
“It is important to realize that this fact in itself is not yet a complete solution to the problem of insurance of military risks, because EKA is able to insure a small number of projects today – reports Deputy Chairman of the Committee on Economic Development Dmytro Kisylevsky.
In order for this tool to work at full capacity, the authorized capital of EKA should be increased. The government should take the necessary steps for this. The source can be funds from the State Budget of Ukraine or international donors. According to the calculations of the DND Institute of Informatization and Modeling of the Economy, the need for the EKA to perform new functions is $300-500 million. The Agency also needs to learn how to reinsure these risks in international companies in practice.
The maximum amount of investments that EKA is currently ready to insure is UAH 200 million. The insurance tariff for direct investments will be 0.49-8.05%, for investment loans – 0.95-4.05%.
The insurance amount is established on the basis of the terms of the credit agreement and taking into account the requirements of the legislation of Ukraine and cannot exceed 100 percent of the debt limit or principal debt. The insured amount is set in the currency of the investment loan.
Previously, only foreign companies could purchase an insurance policy against military risks in Ukraine. Their investments are ready to be insured by international agencies MIGA and DFC. Such insurances in Ukraine have already attracted a number of investors. Now EKA can also do this for Ukrainian companies.