First military, political risk insurance projects launched in Ukraine

MOSCOW. Oct 25 (Interfax) - The first projects offering insurance against military and political risks have been launched in Ukraine as a result of cooperation with international financial institutions and national export credit agencies of partner countries, Ukrainian media said, citing a statement from Ukrainian First Deputy Prime Minister and Economy Minister Yulia Sviridenko published on the Finance Ministry's website.

In her column for the Atlantic Council U.S. think tank, Sviridenko said that the World Bank's Multilateral Investment Guarantee Agency (MIGA) recently confirmed an insurance package to a company specializing in commercial property investment in Ukraine.

This company will invest in the construction of the M10 industrial park on an area of 140,000 square meters in Lvov. It includes six sites for production facilities and warehouses and is expected to create 3,000 new workplaces, the first deputy prime minister said. The company has received up to $9.1 million in guarantees against military risks and civil unrest for ten years. Of this package, $4 million will be provided by donor countries through the Support for Ukrainian Reconstruction and Economic Enhancement (SURE) trust fund, which is overseen by MIGA.

National export credit agencies (ECAs) have also contributed to the introduction of insurance against military and political risks. For instance, Poland's Export Credit Insurance Corporation KUKE will cover the participation of investors in Ukraine's reconstruction and recovery. For more than a year, KUKE has been the only European Union insurer providing guarantees for the sale of goods in Ukraine. Thanks to this support, Polish exports to Ukraine increased by nearly 55% in 2022.

"The U.S. International Development Finance Corporation (DFC) is actively engaged in the issue of military risk insurance in Ukraine. It is also ready to consider insuring investment coming Ukrainian investors. Several applications worth around $200 million are currently in the pipeline. The expansion of military risk investment insurance in Ukraine has been publicly backed by G7 leaders, G19, the European Commission, the World Bank, and a number of individual export credit agencies," she said.

The German, French, Italian, British, Swedish, and Japanese export credit agencies have already committed to participating in political risk insurance for their companies operating in Ukraine, Sviridenko said.

The German government recently made a decision to begin offering export credit guarantees, also known as Hermes Cover, in Ukraine, thus extending the scope of coverage and support for exporters working with Ukraine. French export credit agency Bpifrance Assurance Export has also announced that it will offer insurance coverage to French companies that are ready to invest in Ukraine and actively contribute to Ukraine's recovery even before the crisis is over.

In addition, the European Bank for Reconstruction and Development is in the process of establishing a new fund and raising donor financing for it, Sviridenko said.

"The new fund will boost the local insurance market for property and trade risks. The fund is expected to become operational before the end of 2023," she said.

"While publicly financed programs are providing some much-needed insurance coverage, a key goal remains the reactivation of the international reinsurance market in Ukraine. For this to happen, it is important to challenge perceptions of Ukraine as being a high-risk jurisdiction. One option is the creation of a special trust fund to jump-start global military risk insurance and reinsurance. This could be managed by the governments of partner countries together with Ukraine," Sviridenko said.