The Export Credit Agency (ECA) of Ukraine has begun accepting applications for investment insurance against military and political risks. This initiative follows the implementation of Law No. 3497-IX “On Amendments to the Law of Ukraine ‘On Financial Mechanisms to Stimulate Export Activity’ Regarding Investment Insurance in Ukraine Against Military Risks,” which came into effect on January 1, 2024.
Yulia Svyrydenko, Ukraine’s First Deputy Prime Minister and Minister of Economy, highlighted the significance of this development in a Forbes column. “The introduction of insurance against military and political risks is crucial for both the market and the ‘Made in Ukraine’ policy. A robust insurance infrastructure can attract investors to the Ukrainian market, encouraging the development of export-oriented factories and plants. Previously, insurance against military risks was only available through international organizations such as MIGA, the American DFC, and the Polish agency KUKE. Now, the ECA joins these entities in providing investment insurance within Ukraine, offering additional financial security to Ukrainian companies and bolstering economic activity. This insurance will support the creation of necessary facilities and infrastructure for processing industries and export activities,” Svyrydenko stated.
The ECA will provide two insurance products: direct investment insurance for investors and investment credit insurance for banks.
Military risks covered by the ECA include:
1. Armed conflict, including war or hostilities, and mass disturbances
2. Forcible changes in the constitutional order or state power
3. Terrorist acts and sabotage related to armed conflicts, war, hostilities, mass disturbances, or forcible changes in state power
4. Occupation and annexation
Previously, the ECA only insured the export of goods, works, and services. With this new capability, it can now insure direct investments and related dividends if they are tied to exports.
Investors, both Ukrainian and foreign, can apply to the ECA for insurance if their share of corporate rights in the project exceeds 10%, the investment aims to create infrastructure for processing industries and export goods made in Ukraine, the investment objects are in controlled territories, and the goods meet the requirements of Article 8 of Law No. 1792-VIII of December 20, 2016.
The maximum insurance amount per investment object is 200 million UAH. Banks financing exporters for investment projects can also seek insurance from the ECA against war and political risks, reducing non-payment risks and enhancing the likelihood of loan issuance. The maximum insurance amount for one investment loan is also 200 million UAH, with rates determined individually. The overall insurance volume is capped by the ECA’s statutory capital of 2 billion UAH.
