Insurance of Direct Investments in Ukraine Against Military and/or Political Risks

 

The Export Credit Agency (ECA) of Ukraine has commenced accepting applications for insurance of investments against military and political risks. This initiative is a result of the enactment of Law of Ukraine 3497-IX "On Amendments to the Law of Ukraine "On Financial Mechanisms for Stimulating Export Activity" on Insurance of Investments in Ukraine against War Risks," which came into effect on January 1, 2024.

"The launch of insurance for military and political risks marks a significant milestone for the market and the 'Made in Ukraine' policy," said Yulia Svyridenko, First Vice-Premier and Minister of Economy of Ukraine, in a column for Forbes.

"The developed infrastructure for insuring against military risks can serve as an additional incentive for investors to enter the Ukrainian market and develop their factories. Previously, insurance against war risks was available only from international organizations like MIGA, which insured foreign companies willing to invest in Ukraine, and agencies like the American DFC and Polish KUKE, which provided guarantees to both foreign and Ukrainian companies investing in Ukraine.

This new provision allows Ukrainian companies to receive additional guarantees of financial security, boosting business activity and contributing to the creation of facilities and infrastructure necessary for the development of the processing industry and export of goods made in Ukraine."

The ECA will offer two insurance products:

1. Direct Investment Insurance for investors.
2. Investment Credit Insurance for banks.

The military risks against which the ECA can insure include:

• Military conflict, including war or armed conflict, armed aggression, hostilities, and mass riots.
• Violent change or overthrow of the constitutional system or seizure of state power.
• Terrorist acts and/or sabotage, including those caused by military conflicts, war, armed conflicts, hostilities, mass riots, or violent change or overthrow of the constitutional order and seizure of state power.
• Occupation and annexation.

This move aims to bolster investor confidence and stimulate economic growth by providing necessary protections against significant risks associated with military and political instability.