21 Mar 2024 15:17

Developing set of insurance products crucial to support Ukrainian businesses - Ukraine Facility

MOSCOW. March 21 (Interfax) - The development of a comprehensive set of insurance products is crucial to support Ukrainian businesses in managing risks associated with the conflict and geopolitical uncertainty, the Ukrainian government said in a plan for implementing the Ukraine Facility support program released on Wednesday.

The document underlines the need to consider mechanisms for insuring military risks for businesses, the Ukrainian media reported. The plan proposes introducing risk mitigation tools, including military risk insurance for commercial transportation by inland, water and sea routes, providing insurance of movable and immovable property, and offering investment insurance to promote economic activity.

In the area of political risk insurance (PRI), there are plans to expand existing PRI programs provided by the Multilateral Investment Guarantee Agency (MIGA) and the U.S. International Development Finance Corporation (DFC), and attract donor funding to introduce effective risk mitigation mechanisms such as first-loss layer damage.

Additionally, there is a need to expand and implement property and cargo shipping insurance programs specifically designed to cover military risks for both new investment and existing businesses.

The program pays attention to the Export Credit Agency (ECA) and its role in supporting military risk insurance programs. Specifically, the plan is to access specialized insurance solutions through the ECA in order to mitigate the impact of geopolitical uncertainty on international trade and investment.

According to the program plan, Ukraine's insurance market continues to operate and is stable and solvent despite the crisis. The insurance market shrank sharply between 2021 and 2022, given the economic and political situation, with life insurance markets as well as other insurance markets shrinking by 20% during this period. At the same time, insurance companies are gradually renewing traditional insurance offerings such as life or auto insurance. Market participants note that the lack of military risk insurance significantly hinders economic activity.