The European Bank for Reconstruction and Development (EBRD) and the Aon risk management firm launched a 110-million-euro ($116 million) guarantee program to help insurers cover some war-related risks in Ukraine, the EBRD announced on Dec. 12.
Ukraine's insurance companies have struggled to offer war insurance services as international reinsurers have largely withdrawn from the market after the outbreak of Russia's full-scale war in 2022.
The EBRD's new Ukraine Recovery and Reconstruction Guarantee Facility will help reinsurance companies cover risks connected to land-based transport, focusing on small and medium businesses.
It currently does not extend to fixed assets or maritime transport, though the bank said in a press release that the program may evolve based on market demand.
In August, the Marsh McLennan risk management company launched a $50 million insurance facility for grain shipped via the Black Sea.
The EBRD's facility was launched with the support of European donors and in partnership with the Ukraine-based insurance companies INGO, Colonnade, and Uniqua, as well as the international reinsurer MS Amlin, enabling the companies to ensure higher amounts.
The program does not include a pre-determined list of companies that will be involved, meaning that it will respond to market demand. The EBRD said the facility should enable insurance coverage for over 1 billion euros ($1.05 billion) in vehicles and goods in transit annually.
Active in Ukraine throughout the full-scale war, the EBRD is an international investment institution that has invested more than $5.6 billion in Ukraine since February 2022.
Aon is a British-American professional services company founded by American billionaire Pat Ryan.
"The EBRD’s guarantee will enable private-sector reinsurers to re-engage on Ukrainian war risk and build a resilient insurance market in Ukraine," EBRD President Odile Renaud-Basso said in a statement.
"This is crucial to giving businesses confidence that their assets are protected, which, in turn, will unlock and accelerate investment in Ukraine."
The program was coordinated with Ukraine's Economy Ministry and the National Bank.
"We are sincerely grateful to the EBRD and all parties involved in launching this insurance mechanism. The market has been eagerly anticipating it," Economy Minister Yuliia Svyrydenko said.
"I am confident that this mechanism will provide much-needed support for small and
medium-sized businesses, which have been severely affected by the war."
Lisa Yasko
(Updated: )
