
Introduction
The War risk insurance issue has been on the agenda for Ukrainian insurance market for many years. Since the beginning of the Russian aggression in 2014, Ukrainian entities have been able to obtain Political Violence Insurance (PVI) war coverage from Western reinsurers. Since the full-scale invasion, however, Western reinsurers have refused to operate international insurance programmes in Ukraine. It became impossible for them to cover war risks, as the fact of war had already occurred. The war in Ukraine over the past three years has crossed many predictable red lines: invasion and occupation, arms transfers, use of new types of weapons, airspace violations, war crimes and long-range strikes, the first ever use of intermediate-range ballistic missile (IRBMs) etc.
Repeated violations and sluggish responses to them weaken risk awareness, increase risk tolerance, and encourage escalation to restore deterrence. The geopolitical situation in Ukraine is at the top of the European Political Risk Maps, which has made it virtually impossible to attract direct investment, as no one wants to invest in a business that cannot be covered by insurance. However, not everything is as bad as it seems at first glance. Updated approaches to underwriting and government support have made it possible to resolve the current issue. For a complex understanding, each aspect should be considered in more detail.
Government support for Ukrainian exporters
To protect exports, the Ukrainian government established the Private Joint Stock Company “Export Credit Agency” (ECA). ECA offers two insurance products: direct investment insurance for investors and investment credit insurance for banks. The insurance products include insurance and reinsurance of export credits, as well as insurance and reinsurance against military and/or political risks of loans to Ukrainian business entities related to investments in the creation of facilities and infrastructure necessary for the development of the processing industry and export of goods (works, services) of Ukrainian origin; insurance and reinsurance of direct investments from Ukraine, as well as insurance and reinsurance of direct investments in Ukraine or cases when the investors cannot obtain is unable to receive dividends. In 2024, the ECA concluded 89 insurance agreements, with a funding amount of more than UAH 1 billion.
Foreign initiatives
The assistance of foreign organizations has been crucial in strengthening the Ukrainian war insurance market during these challenging times. An important example is the collaboration between Aon and the European Bank for Reconstruction and Development (EBRD), which established the EUR 110 million Ukraine Recovery and Reconstruction Guarantee Fund. This initiative aims to secure the reinsurance capacity of private sector insurers, meeting the urgent need for war risk coverage.
The EBRD’s guarantee scheme facilitates the re-engagement of international reinsurers in Ukraine, providing that local insurers can underwrite war-related risks with strengthened support from global financial institutions. Key participants of this scheme include international reinsurer MS Amlin and Ukrainian insurance companies including INGO, Colonnade, and UNIQA, all looking to expand war risk coverage for businesses and small and medium-sized enterprises.
The project is funded by donor contributions from countries such as France, the UK, Norway, etc., which makes such insurance more accessible. With additional support from the European Union and Switzerland, this initiative not only brings critical financial protection, but also signals to the global market the viability and necessity of adopting new insurance mechanisms in Ukraine.
This strategy aligns with the EBRD’s broader commitment, as it has already deployed over €5.4 billion since February 2022 to bolster Ukraine’s energy security, infrastructure, and private sector development.
Insurance and reinsurance broker McGill and Partners in cooperation with Lloyd’s Lab Insurtech FortuneGuard and Ukrainian insurer ARX have launched a new war risk reinsurance facility for commercial property in Ukraine. According to McGill and Partners, this new offering is the first ever to use AI-based technology to improve the understanding and underwriting of commercial property risks in the region. The product will offer coverage of up to USD 50 million per risk, with reinsurance options in the London market and Lloyd’s syndicates. The insurance covers threats from damage caused by drones, missiles and air defence debris and does not cover losses caused by cyber-attacks, biological, nuclear, chemical weapons, looting, etc. It also does not cover losses that occurred within 100 km of active combat zones. The product is available to cover losses caused to commercial property and investment projects, both foreign and Ukrainian.
Despite all of that, not all businesses can be insured. Common exclusions from insurance policies include proximity to the front line or to facilities that significantly increase the likelihood of an air attack, such as thermal power plants, hydroelectric power plants, nuclear power plants, ports, airports, oil refineries, military units. Also, companies that manufacture weapons, military equipment, large industrial enterprises located in areas close to the occupied territories, etc. are not eligible for insurance.
Visit Ukraine
Before planning a trip to Ukraine, foreigners should secure appropriate insurance. This is essential since any foreign insurance policy automatically ceases to be valid after crossing the Ukrainian border. This is because insurance companies do not cover war-related risks in countries where military operations or armed conflicts are ongoing.
There is a platform called Visit Ukraine, which provides convenient access to information on the conditions of entry into Ukraine, as well as various types of insurance and their terms. The war risk insurance policy provides financial compensation in the event of an accident related to military operations, passive war risks, and terrorist acts. The policy also covers emergency care, outpatient treatment, hospitalization and repatriation of the insured person (or his/her body in case of death) from the place of stay to the place of permanent residence.
It is available for foreign citizens, nationals of another state, and stateless persons. There are no age restrictions: both minors and persons over 70 years of age can purchase insurance, which covers the territory of Ukraine, except for the temporarily occupied territories of Luhansk, Donetsk, Kherson and Zaporizhzhia regions, the Autonomous Republic of Crimea, as well as front lines.
Legislative changes
The legislative landscape of insurance in Ukraine has undergone significant transformation with the enactment of the Law of Ukraine “On Insurance”, entered into force on 19 December 2021. This law, designed to modernize Ukraine’s insurance framework in line with EU Directive 2009/138/EC and the Insurance Core Principles, introduced critical regulations across several domains, including maritime shipping, commercial aviation, space launching, and freight insurance.
Despite the ongoing war, the process of aligning the insurance sector with these new standards has continued unabated, reflecting the resilience and adaptability of Ukrainian legislative processes. The law granted the market a two-year period, until 1 January 2024, to comply with its provisions, demonstrating a structured approach to reform that does not halt even in times of national crisis, which ensures that the insurance sector remains robust, responsive, and aligned with international standards, providing a comprehensive framework for managing diverse risks effectively.
In addition, on 30 December 2024, the Draft Law of Ukraine “On the System of War Risk Insurance” No. 12372 was introduced to the Verkhovna Rada, which regulates relations in the field of war risk insurance in order to protect the insurance interests of individuals and legal entities and aims to ensure compensation for damage caused to such persons as a result of the implementation of war risks in Ukraine. The aforementioned Draft Law also provides for the establishment of the general principles of the war risk insurance system, regulates the activities of its participants, imposes an obligation on the specified state authorities to approve the list of war risks to be insured, defines the terms and procedure for concluding insurance contracts, and outlines the legal status of the State Agency for War Risk Insurance.
Conclusion
Due to the international and domestic initiatives, the stagnation of the Ukrainian insurance market is becoming less noticeable. It remains to be seen whether a sustainable insurance scheme will be able to be established to fully cover the investment, as Russia continues to attack Ukrainian infrastructure with scorched earth tactics and shows no signs of stopping, with the ultimate cost and terms of recovery highly uncertain. With estimates of total losses above $1 trillion, the war in Ukraine is a global challenge that will require initiatives unseen since the US Marshall Plan after World War II for a recovery that will take decades.
But even despite the challenging wartime conditions, the insurance sector in Ukraine has not only continued to develop, but is also actively improving. Legislative changes, in particular the adoption of specialised law and the drafting of legislative acts, demonstrate consistent efforts to protect the insurance interests of individuals and legal entities. This reflects the resilience and adaptability of the Ukrainian legal system, which continues to integrate with European standards, creating an effective framework for risk management even during the war.
If you have any questions regarding the war risk insurance issues raised in this article, please get in touch with Arzinger.