Aon AON has partnered with a U.S. development agency to introduce a $350 million insurance scheme to protect Ukrainian businesses from war risks.
What Happened: The initiative aims to support Ukraine’s wartime economy and facilitate future reconstruction efforts, Financial Times reported on Wednesday. War risk insurance covers losses due to conflict, and after Russia’s invasion, foreign insurers had largely withdrawn from offering such coverage in Ukraine.
Eric Andersen, president of Aon, described the facility as a “groundbreaking” measure to encourage local insurers to provide war risk policies. This move is seen as crucial for attracting foreign investment needed for Ukraine’s reconstruction, estimated to cost $1 trillion.
The scheme was unveiled at a Ukraine recovery conference in Berlin, where Kyiv sought aid for its energy sector. Scott Nathan, CEO of the US International Development Finance Corporation (DFC), emphasized the importance of building investor confidence in Ukraine.
The first phase involves a $50 million reinsurance facility, with DFC acting as reinsurer to local Ukrainian insurers. Additionally, $300 million in war risk cover is allocated for healthcare and agriculture projects.
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Penny Pritzker, U.S. special representative for Ukraine’s economic recovery, highlighted the necessity of a robust insurance market to attract investment. Taras Kachka, Ukraine’s deputy economy minister, called the scheme an “extremely important” step for the private sector.
Why It Matters: The launch of this insurance scheme comes amid heightened efforts by the international community to support Ukraine. In February, Japan pledged a $10 billion aid package and a new tax treaty to assist Ukraine’s reconstruction efforts. This was followed by the U.S. Congress passing a $95 billion foreign aid bill in April, which included significant military and humanitarian aid for Ukraine.
Additionally, the Biden administration announced plans in June to expand sanctions on semiconductor sales to Russia, targeting Chinese third-party sellers to curb Russia’s war efforts.
Image via Shutterstock
This story was generated using Benzinga Neuro and edited by Pooja Rajkumari
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