The Law on Insurance of Investments Against Military Risks has entered into force in Ukraine
On January 1, 2024, the Law of Ukraine on insurance of investments against war risks through the Export Credit Agency (ECA) entered into force. On December 23, Law No. 3497-IX “On Amendments to the Law of Ukraine “On Financial Mechanisms for Stimulating Export Activities” regarding the insurance of investments in Ukraine against war risks” was published in the “Voice of Ukraine” newspaper.
Adoption of the legislative act will enable the Export Credit Agency (ECA) to insure and reinsure investments of both international and Ukrainian companies even before the end of martial law. Ukrainian export-oriented businesses will have the opportunity to use war risk insurance tools.
The law is aimed at expanding the capabilities of the ECA to insure investments in Ukraine (both foreign and domestic investors), in particular against war risks. From now on, the Ukrainian domestic investor will also have the opportunity to use the national insurance mechanism for non-property military and political risks.
The legislative norm does not change the purpose of the activity of the Ukrainian Export Credit Agency, which is to stimulate the development of the export of goods, works and services of Ukrainian origin to world markets. So we are talking about insurance of investments in export-oriented enterprises.
The Ministry of Economy predicts that the initiative will stimulate investment lending during the war. After all, the EKA insurance policy has already been included by the National Bank in the list of acceptable security for loans.
It will be recalled that the President of Ukraine signed the Law “On Amendments to the Law of Ukraine “On Financial Mechanisms for Stimulating Export Activity” on Insurance of Investments in Ukraine against War Risks”, initiated in particular by People’s Deputies of Ukraine – members of the Committee on Economic Development.
“The State Export Credit Agency received the right to insure investments against war risks. Previously, such a service in Ukraine could be obtained by foreign companies through the international financial organizations MIGA and DFC. Ukrainian companies did not have such an opportunity,” commented the adopted Law of Ukraine, Deputy Chairman of the Committee on Economic Development Dmytro Kysylevsky, as the main author of the bill.
It is worth noting that the mechanism of military risk insurance through the EKA will become fully operational only after the Government approves the by-laws and recapitalization of the EKA. This work in view of the war and the need of investors and industrialists will be carried out on time.
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” enters into force on January 1, 2024.
The implementation of investment insurance against war risks is part of the Plan for the Recovery of the Processing Industry.
As reported by Forinsurer, the Ukrainian Parliament adopted Draft Law No. 9015, which amends the current law “On Financial Mechanisms for Stimulating Export Activity”, focusing on the insurance of investments in Ukraine against war risks. This law, which takes effect on January 1, 2024, is aimed at attracting new investment into Ukraine’s economy by offering protection against losses due to military action. The law specifically modifies existing rules by allowing the Export Credit Agency to insure domestic investments, including in scenarios related to military operations and post-war reconstruction.