The amount of the new guarantee mechanism is €110 million
The EBRD and international insurance and reinsurance broker Aon have announced the launch of the €110 million Ukraine Recovery and Reconstruction Guarantee Facility (URGF). This is stated in the message of the Ministry of Economy.
As noted, this mechanism will provide reinsurance support to international reinsurers and Ukrainian insurance companies to cover the risks associated with the war in Ukraine.
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 €1 billion annually.
Insurance company MS Amlin became the first international partner to join this program. Among the Ukrainian insurers are INGO, Colonnade, and UNIQA, which will use their network to promote war risk insurance among businesses and SMEs.
As Aon noted, the full-scale invasion of Ukraine by the Russian Federation has led to a significant reduction in the reinsurance capacity available to the market, as international reinsurers have largely withdrawn from Ukraine. This has limited the ability of local insurers to offer commercial war risk insurance products. By making the latter more affordable, the mechanism will stimulate business activity and economic growth, paving the way for Ukraine’s recovery and reconstruction.
“I am confident that this mechanism will provide much-needed support to small and medium-sized enterprises that have suffered significant losses due to the war. It will help attract investment in the Ukrainian economy and will signal to other market players that new insurance mechanisms can and should be implemented, as the private sector clearly demonstrates demand for them,” said Yulia Svyrydenko, First Vice Prime Minister and Minister of Economy of Ukraine.
The program is designed to complement those offered by other international organizations and the Ukrainian government.
In May 2024, the Export Credit Agency of Ukraine started accepting applications for investment insurance against military and political risks. As noted, the ECA will offer two insurance products: direct investment insurance for investors and investment loan insurance for banks.
