Aon unveils new insurance program for economic recovery in Ukraine
Aon unveils new insurance program for economic recovery in Ukraine | Insurance Business New Zealand
Insurance News
Aon unveils new insurance program for economic recovery in Ukraine
New $350 million scheme for Ukraine launched
Insurance News
By
Kenneth Araullo
Aon has announced a $350 million insurance program with the US International Development Finance Corporation (DFC) to bolster insurance capacity and accelerate capital investment and economic recovery in Ukraine.
The global broker coordinated a $50 million reinsurance facility, collaborating closely with DFC and the Ukraine Ministry for Development of Economy and Trade. This initiative aims to support the issuance of war risk policies for businesses operating in Ukraine.
Additionally, Aon and DFC developed $300 million in war risk insurance specifically for Ukraine’s health care and agriculture sectors.
“Capital will not go where it is not protected and this unprecedented program with the U.S. International Development Finance Corporation is intended to unlock and accelerate investment in Ukraine at a time when the need is most acute,” Aon president Eric Andersen said at the Ukraine Recovery Conference in Berlin.
This facility will also enable the local insurance industry to appropriately price risk and draw much needed new capital into Ukraine, while creating capacity and capability in the country to support reconstruction.”
DFC will act as the reinsurer for qualified insurance companies issuing policies in Ukraine, assuming $50 million of war-related reinsurance risk. The facility leverages DFC’s established models of on-lending, which guarantees loans by local banks, and insurance underwriting for war and political risk.
The additional $300 million in war risk capacity for Ukraine’s health care and agriculture sectors highlights the demand for accessible war risk insurance by private companies operating in Ukraine, which is expected to grow during reconstruction.
“The US Government is taking steps to help drive capital to the private sector in Ukraine,” DFC CEO Scott Nathan said at the Ukraine Recovery Conference. “The private sector is critical to Ukraine’s recovery, and we are leveraging our unique tools, especially political risk insurance, to build investor confidence in Ukraine at this critical moment.”
The first firm certified as a qualified Ukrainian insurance company to access the reinsurance facility is ARX, a Ukrainian subsidiary of Fairfax Financial. Aon, DFC, and ARX will collaborate to build a portfolio of war risk insurance policies for companies in Ukraine and support ARX in expanding its offerings. With the facility in place, qualified insurance companies can provide rapid war risk policies to businesses in Ukraine, potentially encouraging private market participation by other reinsurers and fostering private investment essential for recovery.
This announcement also follows the appointment of former Commerce Secretary Penny Pritzker (pictured above) as the US Special Representative for Ukraine’s Economic Recovery. In her role, Pritzker has mobilised the private sector, multilateral banks, and businesses to support the Ukrainian economy, playing a key role in advancing the work of Aon and DFC to bring $350 million in private capital to Ukraine.
“As we looked for opportunities to support the Ukrainian economy, we recognised that a robust insurance market was essential to attracting investment in the country. This facility and the infusion of new private capital into Ukraine will help local businesses operate in the country today, while preparing Ukraine for reconstruction and further economic growth,” Pritzker said.
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