Lack of insurance in Ukraine hinders investment - U.S. Special Rep Pritzker
MOSCOW. June 13 (Interfax) - The Ukrainian economy is experiencing considerable challenges because of a lack of insurance products, and this obviously discourages investors, who normally care above all about protecting their capitals, United States Special Representative for Ukraine's Economic Recovery Penny Pritzker said.
"As we looked for opportunities to support the Ukrainian economy, we recognized that a robust insurance market was essential to attracting investment in the country," Ukrainian media quoted Pritzker as saying at the Ukraine Recovery Conference in Berlin on Wednesday.
She said this challenge prompted her and her team to act, and the United States International Development Finance Corporation (DFC) and the global reinsurance broker Aon supported this drive by finding practical innovative solutions. DFC has come up with an insurance product designed specifically for small and medium-sized businesses.
Pritzker said an insurance model her team has built for Ukraine can be scaled up, as it requires a lot of players for this sector in Ukraine to be prosperous. She said she would urge other insurance organizations and international institutions to think how they could join this model, as this mechanism could draw the necessary capital to Ukraine for its economic growth.
DFC CEO Scott Nathan said that, before the crisis, the corporation had a large portfolio in Ukraine, including risk insurance products. At present, to support the country's private sector and economy, political risk insurance products are among the key ones in its portfolio, which have provided $350 million coverage on three contracts in the agricultural, manufacturing, and education sectors over the past year.
Along with ARX as its partner, the DFC can provide $50 million in war risk insurance to various clients, with small policies possibly transferred to larger ones, Nathan said.
Along with Aon, the DFC is developing projects that could further be scaled up, and one of them is to be announced soon, Nathan said.
These steps in fact aim to help local insurance companies build potential for the country, as insurance normally serves as a tool to mobilize capitals, Nathan said. These joint efforts toward offering an innovative insurance instrument should lay the groundwork for future investments in Ukraine's recovery and reconstruction, while it is important to make sure that its economy keeps working, he said.
