USAID will finance war risk insurance for micro, small and medium enterprises of Ukraine
USAID has begun accepting grant applications from financial intermediaries interested in developing war risk insurance tools for micro, small and medium-sized enterprises.
Grants will be used to reduce the cost of insurance products for end policyholders. The purpose of the program is to develop the insurance market of Ukraine and increase resistance to war risks with the help of innovative insurance products.
These products will help businesses reduce risks when implementing investment projects. The main focus is on the risks associated with loss or damage to property as a result of Russian aggression. This support can also help businesses raise additional funding, create jobs and increase sales.
Legally registered financial institutions in Ukraine that have sufficient financial and operational resources to support the development of MSME insurance against war risks are invited to participate.
Grant projects are expected to be implemented within the next 1-2 years. The deadline for submitting applications for grants is July 15.
As reported by Forinsurer, the Export Credit Agency introduced new investment insurance products 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.”
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%.