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External reinsurance, already minimal for Ukraine, has diminished further, stated Deputy Minister of Economy and Environment Economy Yegor Pereverzev at an interdepartmental meeting held by the Verkhovna Rada Committee on Finance, Tax, and Customs Policy on August 10, according to an Interfax-Ukraine correspondent.
According to him, if the capacity of external reinsurance for Ukraine was around $1-1.5 billion as of June 1st this year, now there is almost none of that. Previously, for instance, Lloyds provided $300-$400 million in reinsurance capital for Ukraine at quite high rates of 5%-6%, even 8%, whereas today on the Lloyds market, there are effectively only some situational offers at 8-12%, meaning unrealistic prices, emphasized Deputy Minister Pereverzev.
He noted that even if local insurers were somehow stimulated to insure affected Ukrainian businesses now, they would not be able to reinsure anything.
“Therefore, we are currently developing a mechanism for a universal insurance system, and we will consult with businesses. We have already engaged, for example, with the fuel sector – we have already held several sectoral meetings. We will engage with the retail sector: with retail trade, with logistics providers, with energy companies, and so on. We are currently developing this mechanism,” he stated.
Pereverzev also reported that the Ministry of Economy has now prepared and submitted for approval amendments to Resolution No. 1541, which introduced a state mechanism for insuring and compensating war risks for businesses through the Export Credit Agency (ECA).
The amendments expand insurance for the fuel sector: in addition to gas station premises and equipment, tanks, fuel stocks, fuel in transit, and transport for its carriage are also added. Furthermore, agricultural machinery to support the agro-sector and heavy cargo vehicles of category C, i.e., 7.5 tons and more, to support logistics and food retail, have been added to the list of property covered by the mechanism. It is also proposed to extend the program to Kyiv and the Kyiv region as territories of increased risk, and to allow insurance of leased property.
“This is what we have done so far. I fully agree with Daniil Aleksandrovich (Head of the Finance Committee Getmantsev – Interfax-Ukraine) that the system is not ideal and requires very rapid development and additional specific solutions. I will add that from the perspective of document flow, we are slightly simplifying the bureaucracy for this mechanism,” he noted.