The European Bank for Reconstruction and Development (EBRD) and leading professional services firm Aon are launching a new bank guarantee designed to reinsurance capacity to private-sector insurers in Ukraine. The plan should cover internal domestic cargo, motor vehicle damage and railway rolling stock.
The insurance was launched as a tool for the new €110 million Ukraine Recovery and Reconstruction Guarantee Facility.
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“The EBRD will support global reinsurance companies with a guarantee covering losses on certain war-related risks underwritten by local Ukrainian insurers,” the EBRD wrote in a press release.
The first international reinsurance partner in the facility is global UK-based specialty reinsurer MS Amlin – the company will re-engage with Ukrainian insurers and provide much-needed war risk coverage.
From the Ukrainian side, the facility will be joined by Ukrainian insurance companies INGO, Colonnade and UNIQA as the first local market participants.
They were the first companies who messaged EBRD with their willingness to join the venture, Francis Malige, the Managing Director and Head of the Financial Institutions Group at the EBRD told Kyiv Post replying to a question during the briefing.
The EBRD facility should provide war risk coverage to businesses and small and medium-sized enterprises (SMEs) and scale if EBRD sees effective results after the pilot launch. Apart from the previously mentioned transportation facilities, EBRD may expand to a broader range of assets depending on market demand.
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“It is estimated that the Bank’s guarantee could facilitate insurance cover for up to €1 billion worth of goods and vehicles in transit each year, with a significant economic impact,” the EBRD press release wrote.
The facility is initially backed by France, the United Kingdom, Norway and the TaiwanBusiness-EBRD Technical Cooperation Fund. Additional donor support has been pledged by the European Union and Switzerland.
The EBRD and Aon have also coordinated closely with the Ukrainian Ministry of the Economy and the National Bank of Ukraine when designing the product.
In September this year, Francis Malige told Kyiv Post EBRD planned to create war insurance for domestic cargo in Ukraine.
The key reason for this is that cargo inside the country is not covered by any insurance, so EBRD wanted to take the initiative.
“There is some capacity available for sea cargo, to take grain out of the Black Sea ports and bring them to an export market. The Lloyds market facilitates one of these [plans]. But we identified that inland cargo is not sufficiently covered – trains, trucks, that sort of thing,” Francis Malige explained to Kyiv Post.
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