Investment insurance plays a major role in attracting funds for the recovery of Ukraine. In addition, war risk insurance is a multiplier tool and can carry many more different capital market instruments. As a rule, the reset of the investment market starts with debt instruments. This was stated by Deputy Minister of Economy of Ukraine Oleksandr Hryban during the roundtable “Creating a political risk insurance mechanism (PRIM) for Ukraine” organized by the USAID Financial Sector Reform Activity.

The event was attended by more than 100 participants, including representatives of the Government of Ukraine, the financial and business community as well as international providers of investment guarantees. The main topics of the discussion were the implementation of the military-political risk insurance mechanism for Ukraine, expectations from such an instrument as well as ways to optimize procedures for investors.

As Oleksandr Hryban noted, negotiations are currently underway with international donors regarding the creation and filling of a target Trust Fund (the so-called insurance pool), which could act as a reinsurance potential to increase the interest of international financial institutions such as MIGA and DFC in the insurance of investment projects.

“Ukraine needs a special Trust Fund that will attract funds and share the risks of creditors, investors and insurers – both public and private. The trust fund should cover the “first risk” to attract private reinsurers, provide for insurance indemnity in the case of insured events related to war, political violence, negative Government interference as well as provide Ukrainian investors with the same protection options as foreign investors. The government of Ukraine should play a crucial role in determining investment priorities and creating an open, competitive and transparent investment climate,” commented Robert Bond, Chief of Party, USAID Financial Sector Reform Activity.

“The Trust Fund should provide reinsurance capital. We expect to receive USD 510 million this year, which we will be able to double due to the multiplier effect and by attracting private capital. Most of these funds will then be used to support long-term investments. In addition, by mobilizing large international reinsurers, we hope to launch the Ukrainian insurance market in the short term, in particular, in cooperation with the National Bank of Ukraine,” added Deputy Minister of Economy Oleksandr Hryban.

The event was also attended by First Deputy Governor of the National Bank of Ukraine Kateryna Rozhkova, Deputy Minister of Agrarian Policy and Food of Ukraine Markiian Dmytrasevych, Managing Director of Political Risk Insurance and Reinsurance at U.S. American Development Finance Corporation (DFC) Marlena Hurley, Regional Head of Europe and Central Asia at Multilateral Investment Guarantee Agency Olga Sclovscaia, representatives of the Advantage Ukraine investment platform and others.

During the expert discussion, four options for unlocking the international insurance market for Ukraine were presented, including:

1. Creating a special Trust Fund and Underwriting Department as part of the existing military-political risk insurance agency.

2. Using existing examination on military-political risk insurance within the new management structure.

3. Establishing a new military-political risk insurance agency at the national or multinational level, which will act as an Organizational Platform and “grow” the Underwriting and Administration Unit, transferring knowledge, skills and approaches to the new legal entity.

4. Establishing a new military-political risk insurance agency based on the best practice of the global market for insurance of this type of risks.

More detailed information on the Concept developed by the USAID Financial Sector Reform Activity is available at the following link.