Securing Ukraine: how political risk insurance can help investors


Russia has been waging the war against Ukraine for over ten years now – since 2014, using almost all possible types of weapons and causing not only thousands in death toll, but also massive lost profits and economic downshift. The devastating losses have been caused to projects with multimillion foreign investment involved, including Retroville Mall in Kyiv, Riviera Mall in Odesa, and many others.

These and other political violence events have created a perception of instability adversely affecting the investment climate in Ukraine. Military threats are posing significant risks to businesses by interrupting production and disrupting supply chains. To address these challenges, businesses need robust mechanisms to protect their operations from such risks.

In such volatile environment, political risk insurance (PRI) emerges as a crucial tool in this regard, providing coverage for property damage, investment losses, and more. It not only offers financial protection to foreign investment in Ukraine. It also boosts investor confidence and facilitates economic recovery of Ukraine.

Insurance of political risks plays several key roles. Firstly, it acts as a financial shield against destruction of assets and loss of investments due to war and other related risks. This type of insurance is aimed to cover risks that are typically excluded from standard insurance policies, thus filling a critical gap in the protection available to companies in conflict zones. Secondly, this kind of insurance helps improve the overall risk profile of insured businesses, making it easier for them to access third-party financing. Investors are more likely to commit funds to projects in Ukraine if they have the assurance that their investments are protected despite the war.

How Political Risk Insurance is regulated in Ukraine

In November 2023, the Ukrainian Parliament adopted amendments to the Law "On Financial Mechanisms for Stimulating Export Activities", establishing legal grounds for insuring investments in Ukraine by empowering the state-owned Export Credit Agency (ECA) to insure certain domestic and foreign investments against political and war risks. This was further supported by the Government Resolution No. 388 in April 2024, which detailed the specific risks covered under political risk insurance (PRI) and war risk insurance (WRI).

This Resolution outlines that WRI covers events such as military conflict, including war or armed conflict, armed aggression, hostilities, mass riots, seizure of state power, terrorist acts, sabotage, occupation, and annexation. PRI, on the other hand, covers forced alienation or seizure of property, unlawful revocation of licenses, failure or refusal of the state to fulfill its statutory obligations, and impossibility of currency conversion or transfers abroad.

The Ukrainian insurance laws have been harmonised with the respective EU standards. NBU has revised requirements for insurance provisions and reserves, simplified the licensing process, and addressed the specifics of insurers’ management and internal control systems. Additionally, foreign insurers can now operate in Ukraine without establishing a subsidiary or opening a physical division, provided they meet certain eligibility criteria for their credit rankings and experience.

Challenges in Obtaining Political Risk Insurance in Ukraine

Ukrainian insurance market has so far been able to offer limited PRI, primarily due to the fact that this type of insurance has only recently begun to develop. Despite the growing demand, the present political uncertainty due to the full-scale war and the lack of a long-standing established legal framework have created obstacles to active growth of this insurance sector. 

The biggest challenges for the Ukrainian PRI market include:

  • Actual occurrence of political risks, which makes insurers hesitant to provide coverage against the risks that have already occurred. A suitable solution to this problem is being elaborated by USAID and other interested parties.
  • High insurance costs due to the elevated risks involved make it unaffordable for some companies. Moreover, PRI policies often contain exclusions that limit their applicability in specific situations, such as occupation or annexation of territories.
  • Effective risk assessment is also challenging, especially in war-torn regions. Insurers need to evaluate, which regions are relatively secure, and which are prone to ongoing dangers like shelling and occupation. However, the dynamic nature of war makes this task particularly difficult and requires changes in risk assessment methodology.
  • Assessment of property damage during war presents another problem. Traditional assessment methods are often inadequate in conflict zones, where access to affected areas can be restricted or dangerous.
  • Process of confirming insurance claims and collecting evidence is complicated due to the ongoing war.

Successful PRI Cases in Ukraine

Despite these challenges, there are notable successes in the Ukrainian PRI market, primarily driven by international organizations like DFC and MIGA, both of which have been taking an active position in supporting investment projects in Ukraine since 2022.

DFC offers political risk insurance against inability to convert currency, political violence, expropriation and seizure of investor property, and other war-related threats. By the end of winter 2024, DFC has already insured a number of energy, healthcare, infrastructure, agriculture, and financial projects in Ukraine for over $ 400 mln.

MIGA also offers political risk and political violence insurance and reinsurance in Ukraine covering non-commercial risks: transfer restrictions, contract breach, expropriation, etc. MIGA provides support only for international investors and even in countries where private investors do not dare to work.

For instance, ERU Group and its Ukrainian subsidiary were the first to receive a 20-year insurance policy from DFC for $ 100 mln to cover political violence, loss of assets caused by war and other political events.

Moreover, $ 250 mln were allocated by DFC to support MHP, LSE-listed leading agribusiness group in Ukraine, to mitigate the effects of Russia's war against Ukraine, increase food production and storage, and support its export capacity. The Superhumans Center, which provides free services for prosthetics, rehabilitation, reconstructive surgery, and psychological support to those injured in the war in Ukraine, has received insurance from the DFC totalling $ 25 mln. 

MIGA has also provided PRI coverage for the M10 Industrial Park project in Lviv, offering a guarantee of up to $ 9.2 mln against war risks and civil strife. This project underscores the importance of PRI in attracting foreign capital to Ukraine, even in regions relatively distant from the front lines but still vulnerable to airstrikes.

Other examples include coverage of risks by the governments. Notably, in November 2022, our team helped a client obtain the first investment guarantee from the German Federal Government since the start of the full-scale war. This insurance helped the company to complete the construction of a plant in Lviv region. Similarly, the German pharmaceutical and agrochemical group Bayer was able to secure a EUR 60 mln investment guarantee to expand the capacity of its seed plant in Zhytomyr region.  

What Does a Portrait of Potential PRI Receiver look like

Given the lack of official stat data starting from 2022, it may be difficult to operate accurate figures as to the scope of demand for PRI in Ukraine. According to open sources, the projects that obtained coverage in 2022-2024 came from infrastructure, energy, healthcare, and agricultural sectors. As these industries are so-called critical areas of economy during wartime, their actors are highly likely to be shortlisted for PRI.

However, the coverage is also demanded in all other sectors of economy too, be it a small publishing house in Kharkiv or a large food retailer in Odesa. As the market matures, it is expected to offer more solutions to meet the diverse insurance needs of Ukraine’s economic landscape.


Political risk insurance is becoming increasingly vital for businesses in Ukraine, providing essential protection against the uncertainties posed by Russia’s ongoing war against Ukraine. While the Ukrainian political insurance market faces significant challenges, the evolving legal framework and successful precedents set by international organizations and governments point to a promising future. PRI comes highly instrumental in safeguarding current investments and attracting future investments which are essential for Ukraine's post-war recovery and economic growth.


The article has been written in co-authorship with Tetiana Buslova, Paralegal, and originally published on Ukrainska Pravda.