War Risk Insurance In Ukraine: New Government Mechanisms And Market Outlook

January 2026 – As a result of Russia's ongoing aggression, businesses across virtually all sectors of the Ukrainian economy have suffered severe damage and financial losses. Missile strikes, drone attacks, and other forms of hostilities affect both frontline and rear regions – and the number of impacted enterprises continues to grow on a daily basis. According to expert assessments, by mid-2025 Ukraine's direct, documented losses incurred from the war had reached approximately USD 176 billion¹.

In such an environment, investors, both domestic and international, naturally seek mechanisms to protect their assets and capital exposure. Insurance is one of the few tools capable of providing such risk mitigation at scale.

Why "ordinary" insurance does not work in wartime

Under standard commercial insurance policies, war and hostilities are typically excluded risks. Damage caused by missile strikes, shelling, or other acts of war does not constitute an insured event under conventional property insurance. As a result, businesses cannot expect compensation under such insurance contracts for losses directly attributable to military actions.

Globally, such risks are addressed through a specific category of coverage commonly referred to as "political risk insurance". In the Ukrainian context, this type of coverage is most commonly called "war risk insurance" ("WRI"). These instruments are specifically designed to cover losses arising from war, political violence, and related extraordinary events.

From niche product to growing market

Prior to 2022, WRI was virtually non-existent in Ukraine. Coverage was limited to a small number of isolated projects, typically backed by foreign export credit agencies insuring investors from their home jurisdictions. The full-scale invasion fundamentally changed this landscape. Since then, the WRI market in Ukraine has begun to develop rapidly, driven by both practical necessity and targeted policy support.

Today, investors have several avenues to protect their investments against war-related risks:

• Commercial insurance products. Some large domestic insurers have introduced WRI policies for Ukrainian businesses. In practice, however, these products are typically subject to relatively low coverage limits and strict geographic exclusions, often excluding areas located within 100–150 kilometres of the frontline. Due to the exceptional severity and unpredictability of war-related risks, only a limited number of insurers are currently willing to underwrite such coverage. To mitigate exposure, these policies are routinely reinsured abroad through international reinsurers such as London market players. Placement negotiations usually involve international reinsurance markets and foreign counterparties.
• International development and guarantee institutions. Major international players, including the U.S. International Development Finance Corporation and the Multilateral Investment Guarantee Agency, have already provided war risk insurance coverage for Ukrainian projects totalling tens of millions of US dollars. In parallel, foreign export credit agencies (particularly those from Germany, Poland, Denmark, and several other countries) have been actively supporting investors from their home jurisdictions by issuing guarantees that in aggregate exceed USD 1 billion for business activities in Ukraine.
  
  

The central role of the Ukrainian state

That said, particular attention should be paid to the WRI mechanisms introduced by the Ukrainian government. These programs are designed to provide broader and more comprehensive protection for both domestic and foreign investors, complementing private and international insurance solutions.

Since 2024, the Export Credit Agency of Ukraine ("ECA") has developed two core war risk insurance products tailored for investors involved in export-oriented projects: (i) insurance of direct investments, available to investors holding at least a 10% equity interest in the relevant enterprise, and (ii) insurance of investment loans, available to the banks financing such projects. Both instruments are focused on investments into production facilities and infrastructure supporting the processing industry and the export of Ukrainian goods and services.

Over the past two years, these programs have moved beyond the pilot stage, with several insurance agreements already concluded and war risk guarantees issued.

Enhanced state support for war risk insurance starting in 2026

The role of the ECA is set to expand significantly. Starting from 1 January 2026, a new and significantly enhanced war risk insurance (WRI) framework will come into force, pursuant to Resolution of the Cabinet of Ministers of Ukraine No. 1541, dated 28 November 2025. This framework introduces two key financial protection mechanisms: (i) direct compensation for businesses operating in high-risk regions, and (ii) the partial compensation of war risk insurance premiums for businesses nationwide.

Under the direct compensation mechanism, businesses whose property is located in designated high-risk regions (including the Dnipropetrovsk, Donetsk, Zaporizhzhia, Mykolaiv, Odesa, Poltava, Sumy, Kharkiv, Kherson, and Chernihiv regions, excluding any temporarily occupied territories) may apply for financial protection through the ECA. The program provides compensation for direct war-related losses of up to UAH 10 million (approximately EUR 200,000) per business group, provided that such compensation does not exceed the amount of documented and verified actual losses. Participation in this program is voluntary and requires a one-time contribution equal to 0.5% of the total estimated potential loss associated with the declared property.

Additionally, businesses operating across Ukraine may apply for a partial reimbursement of insurance premiums paid under WRI policies concluded with commercial insurers after 1 January 2026. Under this mechanism, the state reimburses the portion of the given insurance tariff exceeding 1%, up to a maximum of UAH 1 million per insurance contract. By way of illustration, where a WRI policy is issued at a tariff of 6%, the state may compensate up to 5%, subject to the overall monetary cap. All applications are subject to a fixed administrative fee of UAH 5,000 (approximately EUR 100), payable to the ECA.

Only Ukrainian residents are eligible to apply for compensation under the ECA programs.

Toward a long-term and systemic solution

Crucially, the current ECA mechanism, along with the WRI instruments currently offered by the state, are just the initial steps. More broadly, Ukraine is already working on developing a comprehensive, multi-tier WRI system. This will be universal in scope and provide adequate financial protection for businesses facing ongoing security risks posed by Russia, including after active hostilities have ceased.

In this context, the Ukrainian parliament is presently considering a draft law "On the System of War Risk Insurance" (Draft No. 12372, dated 30 December 2024). The bill aims to create a structured, multi-level risk-sharing model that involves private insurers, the state, and international partners. It also proposes introducing mandatory forms of WRI and standardized insurance terms. The law is expected to be adopted in 2026, subject to further debate and amendments.

Outlook

Ukraine continues to develop and refine accessible and increasingly sophisticated mechanisms to protect businesses and investments from war-related risks. Investors can already rely on state-backed instruments offered by the ECA, as well as products provided by local insurers, international financial institutions, and export credit agencies.

As Ukraine's legal and institutional framework continues to further adapt and develop, the war risk insurance market will play an ever-growing role in sustaining investment activity, supporting reconstruction, and strengthening confidence in Ukraine as a place to do business.

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Footnote

1. BDO Ukraine, Valuation of War Damage, Information Guides from BDO in Ukraine (available at: https://www.bdo.ua/en-gb/ukraine-recovery-1/information-guides-from-bdo-in-ukraine/investments-in-ukraine/valuation-of-war-damage).