Safeguarding against risks is a key challenge for investors in Ukraine, with those related to the war being the most significant for the insurance market. The reverberations from Russia’s invasion have triggered an unprecedented conundrum for the Ukrainian economy, where the quest for viable coverage stands as a test of both resilience and ingenuity.

Since 2022, international reinsurers have notably stepped back from providing war risk cover to Ukrainian insurers, casting a sombre pall over the landscape. The lack of insurance not only hinders the development of Ukrainian domestic business and investment, but is also one of the main obstacles to foreign direct investment in the country.

There are several international organisations and foreign agencies that have been offering military and political risk coverage to businesses already operating or currently being set up in Ukraine and this coverage is still available during full-scale Russian invasion. The initiatives at hand were in fact designed to protect the establishment and maintenance of business in Ukraine during this difficult period.

Amongst the most prominent organisations currently offering such coverage are the Multilateral Investment Guarantee Agency and US International Development Finance Corporation. MIGA offers political risk insurance covering war, civil disturbance, breach of contract by governments and state-owned entities and expropriation, along with guarantees through the Support to Ukraine’s Reconstruction and Economy Trust Fund. MIGA has been active in providing PRI in Ukraine, issuing more than US$215m in PRI guarantees since the beginning of the Russian invasion in February 2022. DFC provides PRI covering inconvertibility, political violence, expropriation, arbitral award default, breach of contract for capital markets and non-honouring of financial obligations.

Several countries offer coverage for businesses originating from their own countries. The Export Credit Agency of Ukraine, established by the Ukrainian government, offers insurance, reinsurance and guarantees for exports of Ukrainian origin. Recent amendments to Ukrainian law aim to enable insurance of FDI against military and political risks. This coverage should begin to be distributed once regulations are implemented by the Cabinet of Ministers of Ukraine.

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