EBRD guarantees: first Ukrainian companies to benefit from war risk insurance program
1 April 08:49
Companies operating in Ukraine can now take full advantage of a new war risk insurance instrument developed by the European Bank for Reconstruction and Development (EBRD) and the international insurance and reinsurance broker Aon. This was reported by the EBRD, according to "Komersant Ukrainian".
Who is a participant in the project
Ukrainian insurance companies INGO, Colonnade, and UNIQA have already started offering war risk insurance policies after concluding reinsurance agreements with the international reinsurance company MS Amlin.
For its part, the EBRD provides global reinsurance companies with guarantees that cover losses on certain war-related risks insured by local Ukrainian insurers.
MS Amlin was the first reinsurer to join the EBRD mechanism.
What risks are covered and for what amounts
At the start, the program will cover insurance of cargo, motor vehicles and railway rolling stock, with the possibility of expanding to other assets.
The guarantee is expected to provide insurance for goods and vehicles worth more than EUR 1 billion annually.
Participation in the program has already allowed three Ukrainian insurers to expand their war insurance offerings, as they can now take advantage of reinsurance coverage from abroad.
In the first few weeks, the scheme has already provided reinsurance coverage totaling more than EUR 5 million. The relevant policies were reportedly signed with companies operating in the agricultural sector.
Why did the need for the reinsurance project arise?
After Russia’s full-scale invasion of Ukraine in February 2022, international reinsurers largely left the Ukrainian market, which led to a significant reduction in the reinsurance capacity of local insurers. As a result, they were severely restricted in their ability to offer commercial insurance products, as they were unable to reinsure their own loss risks.
In late 2023, Ukrainian insurance companies began offering limited policies against certain war-related risks. Now, with the involvement of international partners, the opportunities are growing. Clients can be offered higher limits of loss and larger aggregate amounts, which contributes to greater availability of the product in the market.
The project is open to other companies
According to the EBRD, this mechanism is designed as an open platform that can conduct transactions with various insurance and reinsurance companies seeking to offer insurance against war risks.
Interested clients can access insurance policies through their local brokers or by contacting one of the three Ukrainian insurance companies directly.
The project is supported by France, the United Kingdom, Norway, and the TaiwanBusiness-EBRD Technical Cooperation Fund. Additional donor support has been pledged by the European Union and Switzerland. Further donor contributions will increase the size of the EBRD guarantee over time.
As a reminder, the EBRD, together with the international insurance and reinsurance broker Aon , announced the launch of the EUR 110 million Guarantee Facility for the Recovery and Reconstruction of Ukraine in mid-December last year.
At the time, Yulia Svyrydenko, Minister of Economy of Ukraine, expressed confidence that this mechanism would provide much-needed support to small and medium-sized enterprises that have suffered significant losses due to the war, help attract investment in the Ukrainian economy, and signal to other market players that new insurance mechanisms can and should be implemented, as the private sector clearly demonstrates demand for them.
How the EBRD supports Ukraine
Since February 2022, the European Bank for Reconstruction and Development has channelled more than €6.2 billion to Ukraine, focusing on supporting energy security, critical infrastructure, food security, trade and the private sector, as well as key policy reforms.
In 2023, the EBRD’s Board of Governors approved a €4 billion capital increase to support investments in Ukraine both during the war and in the next phase of reconstruction.
