Starting from October 1, a new war risk insurance program for businesses will be implemented in Ukraine. The program model has been developed considering the specific characteristics of different regions and includes two separate mechanisms — for frontline areas and for other regions of the country. The project is a compromise solution that has been agreed upon by Prime Minister Yulia Svyrydenko.
This is reported by Business • Media
Features of the Program for Frontline Regions
In frontline areas, the Export Credit Agency (ECA) will act as the program operator. Individual entrepreneurs and legal entities from these regions will be able to approach the ECA to receive compensation for property destroyed due to hostilities. To participate in the program, registration with the agency is required, along with the payment of the relevant fee. Currently, the fee amounts and maximum payout limits are still being negotiated. At the same time, compensation will not be provided to companies that have tax debts or are under sanctions. For the full launch of the mechanism, amendments to the existing legislation are necessary.
Mechanisms for Other Regions and Participation Conditions
For other regions of Ukraine, the program will follow a principle similar to the state preferential lending program “5-7-9%”. The state will partially compensate the insurance premium to reduce the rate for businesses to approximately 1%. For instance, under an insurance contract for 10 million hryvnias with a 3% rate, the company will only pay about 1% of the cost, while the rest will be covered by the state budget. The final limits for insurance payouts are still being determined, and the Ministry of Finance will establish the funding sources — both budgetary funds and international assistance are being considered.
Insurance market participants warn that the mechanism will not make insurance widespread due to limited risk appetites and coverage limits. For large businesses, the limit is around ₴10-20 million, so the tool is most suitable for the needs of small and medium-sized enterprises.
Thus, the new war risk insurance program is designed to primarily support small and medium-sized businesses and enhance the resilience of the entrepreneurial environment during wartime.