Exclusive Business in a minefield: who insures the Ukrainian economy against missiles and losses, and how

Despite the fact that the war has been going on for four years now, there is still no affordable insurance for military risks in Ukraine

The lack of insurance against military risks is hindering the development of the Ukrainian economy – 69% of entrepreneurs consider this to be the main factor for investment. Over the four years of war, international programs and government initiatives have emerged in the country, but there is still no unified system. GMK Center analyzed which mechanisms are already in place, why they are insufficient, and what is needed to create comprehensive protection for businesses.

Why insurance is important

With the start of full-scale aggression, the Ukrainian economy faced unprecedented military risks. Damage and destruction of production facilities and infrastructure, disruptions in logistics and energy supplies created an extremely unstable environment for economic activity and investment.

The lack of insurance coverage for military risks has become one of the main barriers to the development of the Ukrainian economy and attracting investment during the war. According to a survey by the Business Ombudsman’s Office, military risks are the main factor in investment decisions for 69% of entrepreneurs. According to a study by KPMG in Ukraine, 82% of Ukrainian CEOs cite transparency of the legal system, capital protection, and insurance against military risks as the main conditions for attracting foreign investment.

Before the war and in 2022–2023, there were no war risk insurance programs in Ukraine. Ukrainian businesses were forced to either take on the risk of property loss themselves or freeze investment projects. Under such conditions, virtually no new foreign capital came in.

The lack of war risk insurance not only hinders economic activity and prevents the inflow of investment, but also reduces the creditworthiness of Ukrainian companies and increases risks for foreign investors. In countries with a stable risk insurance system, investors are willing to invest even in unstable regions, knowing that their capital is protected.

Existing programs

Despite the difficult situation, a system for insuring military risks is gradually being formed in Ukraine with the support of international partners and the state. The first successful example was the Unity Facility program, created in November 2023 with the participation of foreign insurance companies and Ukrainian state banks. Initially, the program helped to halve insurance rates for grain exports from Black Sea ports, and in March 2024, it was extended to all non-military cargo.

Today, the mechanism for insuring military risks in Ukraine is a combination of state/international initiatives and commercial insurance products:

1. Multilateral Investment Guarantee Agency (MIGA). As of July 2025, MIGA had issued political risk insurance guarantees for Ukraine in the amount of $448 million. Only a small portion was directed to the real sector of the economy, rather than the financial sector. The minimum insurance amount is $5 million, and the cost is 2% of the contract amount.
2. US Development Finance Corporation (DFC). Several insurance programs worth hundreds of millions of dollars have been launched. DFC offers coverage of up to $1 billion for a term of 3 years. The minimum insurance amount is $10 million, and the cost is 2% of the contract amount.
3. EBRD-Aon Program. The €110 million program, launched at the end of 2024, provides for the European Bank for Reconstruction and Development (EBRD) to provide guarantees to international reinsurers to cover losses on specific war risks, enabling local insurance companies to offer commercial insurance again.
4. International credit and export agencies. Approximately 15 agencies from different countries offer insurance against military risks for their companies planning to enter the Ukrainian market. They insure both short-term export contracts and long-term contracts and investments. The rates for such insurance are higher than those of MIGA and DFC.
5. Export Credit Agency of Ukraine (ECA). Since January 2024, ECA has been insuring investments against military and political risks. The agency offers two main products: direct investment insurance for investors (from 0.5% to 8.05% of the contract amount) and investment loan insurance for banks (from 0.95% to 4.05%). The agency covers projects worth up to UAH 200 million ($5 million).
6. Private insurers. Although most Ukrainian insurance companies insure war risks for private clients to one degree or another, only a limited number of them are willing to cover losses for businesses.

Advantages and disadvantages

Each program has its strengths and weaknesses. The advantages of international programs include high reliability of guarantees from reputable organizations, international reinsurance, significant coverage, and use of the existing infrastructure of the Ukrainian local insurance market. The MIGA and DFC programs are particularly attractive to large foreign investors and are designed to support the financial stability of non-resident capital in Ukraine.

Their disadvantages include:

1. High insurance costs. The high risks associated with war conditions affect the price of insurance services, and Ukraine’s ratings, which are close to default level, only exacerbate the overall negative situation.
2. Slow procedures (company verification can take up to six months).
3. Difficulty in obtaining coverage for Ukrainian companies. MIGA works only with foreign investors, while other programs require Ukrainian companies to have a fully transparent business and a significant liquid collateral contribution.
4. High entry threshold. The minimum insurance amount of $5–10 million automatically excludes a significant portion of small and medium-sized businesses.
5. The EBRD program focuses only on certain types of assets (cargo, motor vehicles, railway equipment).

«Current insurance programs have a number of limitations. For example, many of them are primarily targeted at foreign investors, have high insurance premiums, limited coverage limits, and complex access procedures. This reduces their practical accessibility for a wide range of Ukrainian companies, especially small and medium-sized businesses,» said Viktoria Kulikova, head of the European Business Association’s committees department, in a comment to GMK Center.

ECA has the advantage of being accessible to Ukrainian businesses and having a relatively quick application process. The program is limited to a maximum coverage amount of approximately $5 million, which is insufficient for large investment projects. ECA’s performance statistics (in 2024, the agency concluded 69 insurance agreements worth over UAH 1 billion) show that the agency has not issued any significant investment guarantees. This indicates limited demand or difficulties in implementation.

Ukrainian private insurers provide quick access to services and flexibility, but have critically low coverage limits (up to UAH 20–30 million), and the inability to reinsure on international markets limits their capabilities. For many companies, especially SMEs, the cost of local insurance products is too high (on average, 1.5% to 5% of the amount), and the insurers’ requirements are too strict.

«International experience in insuring war risks shows that such a policy for businesses should cost an average of 1-3% per annum of the investment volume. Owners usually expect compensation of up to 90% of project losses related to war,» says Dmytro Kysilevsky, deputy chairman of the Verkhovna Rada Committee on Economic Development.

There are several problems related not so much to the programs themselves as to the general environment. The scope of existing programs does not meet the real needs of the economy in wartime. The main problem of the market is its inability to take on more risks due to the lack of international reinsurance.

After the start of full-scale aggression, Western reinsurers refused to work with Ukraine and have not yet returned to the market. Ukrainian insurance companies have lost the opportunity to diversify risks in international markets, which has sharply reduced their ability to offer coverage for war risks.

«In the fourth year of the war, we still do not have mass insurance against military risks, only isolated cases and mainly insurance for foreign businesses. We need such insurance. Not only for direct losses, such as from missile strikes, but also insurance for indirect losses. For example, compensation for downtime, as is the case in Israel,» says Danylo Getmantsev, chairman of the parliamentary committee on finance, tax, and customs policy.

The existing programs are separate initiatives, each with its own requirements, restrictions, and procedures. There is currently no unified system with clear rules. In the first quarter of 2026, the National Bank of Ukraine plans to present a comprehensive draft law «On the System of Insurance of Military Risks» after the previous version was rejected by parliament. The reasons for this were the substitution of the idea of ensuring the availability of insurance with the obligation to insure bank collateral, as well as the proposal to create a State Agency for War Risk Insurance, which, being both a regulator and a commercial joint-stock company, would have a monopoly on such insurance. It is not yet known how the future draft law will change the existing system of military risk insurance.

“Frontline” insurance

The problem of war risk insurance is particularly acute in frontline regions. Businesses there are forced to operate on a limited basis or cease operations altogether due to numerous difficulties. There is no question of development in frontline territories. These regions receive virtually no bank loans due to the lack of liquid insured property and high risks.

On January 1, 2026, a new mechanism for insuring property against military risks, administered by the ECA, came into effect in Ukraine. The 2026 state budget allocates UAH 1 billion for its implementation.

«Businesses have been demanding this tool since the first months of the full-scale war. Without insurance against military risks, it is impossible to plan work and recovery. In the last year alone, the number of attacks on business facilities has more than tripled — financial guarantees are critically needed,» said Prime Minister Yulia Svyrydenko.

The program has two components. The first is direct compensation for losses incurred by businesses in frontline regions (Dnipropetrovsk, Donetsk, Zaporizhzhia, Mykolaiv, Odesa, Poltava, Sumy, Kharkiv, Kherson, and Chernihiv regions). Businesses can receive up to UAH 10 million in compensation for property destroyed or damaged as a result of missile and drone strikes, falling debris from air defense systems, fires, explosions, and shock waves. The insurance rate is 0.5%.

The second component is partial compensation of insurance premiums for businesses throughout the country. The state compensates for the portion of the insurance rate that exceeds 1%, up to UAH 1 million per contract per year. For example, if a company in the Ternopil region insures property for UAH 50 million at a rate of 3%, the state will compensate 2%, but not more than UAH 1 million. To participate in the program, companies pay a contribution of UAH 5,000 when submitting each application.

The positive aspects of this program are obvious. This is the first systematic solution that makes war risk insurance accessible to SMEs, which is especially important in frontline regions where businesses face the greatest risks. Even a slight reduction in the financial burden on businesses will have a positive impact on their activities.

The program has significant limitations. The biggest problem is insufficient funding given the enormous need, especially in frontline territories.

«The budget only allocates UAH 1 billion. This is a drop in the ocean if, as of January 1, 2025, according to RDNA4 estimates, direct losses reach $172 billion. Acceptance of compensation claims will cease when their volume exceeds the UAH 1 billion allocated in the budget. In other words, if on the first day of the new year only 100 applications for compensation of UAH 10 million each are received, the program will be put on hold,» notes Danylo Getmantsev.

Ukrainian businesses hope that the government will find additional funding for the program. The Ministry of Economy has promised to seek funds, but this will be difficult to do, as the 2026 state budget already has a $300 billion “hole” for priority defense needs.

«The main challenge remains the relatively small amount of funding for the program, which may limit the number of companies that will be able to take advantage of this tool. The European Business Association expects the government to consider additional funding for this initiative in the future, as well as its scaling in conjunction with international reinsurance mechanisms,» emphasizes Victoria Kulikova.

The compensation cap of UAH 10 million for frontline regions and UAH 1 million in subsidies for insurance premiums for other regions may be insufficient not only for medium and large enterprises, but even for a significant portion of small ones. It is also important to note that the program only applies to new insurance claims, meaning that losses from the war in 2022–2025 remain the responsibility of asset owners.

Conclusions

Insurance against military risks in Ukraine in wartime is one of the most important elements of economic stability and Ukrainian business. The lack of reliable insurance mechanisms blocks foreign and domestic investment, restricts lending, and creates unfair conditions in which frontline territories do not have access to essential financial products.

Despite international guarantees, the emergence of commercial products, and government initiatives, the risk coverage system is still in its infancy. Each of the existing programs makes its own contribution, but none provides a comprehensive solution, which is impossible without the creation of a legislative framework.

To create a truly effective military risk insurance system, Ukraine needs to combine several elements: expanding the availability of insurance products with acceptable rates, attracting international donors to form a risk coverage pool, bringing Western reinsurers back to the Ukrainian market, and creating a unified legislative framework.