Briefing: New war facility in Ukraine a shining example of what insurance can be

By Acting Editor Yiannis Kotoulas

The true cost of war is hard to quantify. No-one can put a price on the lost family members, homes and the trauma that those who survive its clutches must endure. 

However, the task of forecasting the financial implications of rebuilding from conflict is a necessary exercise – and one that throws the fundamental importance of the insurance sector into sharp relief. 

The latest needs assessment for Ukraine, carried out by the World Bank and published at the beginning of the year (24 February 2023), estimated that the country would require £340bn ($411bn) for rebuilding over a 10 year period to recover from the Russian invasion.  

And at the Ukraine Recovery Conference in London earlier this summer (21 June 2023), an alliance of international actors signed a statement of intent detailing their co-operative desire to relaunch the private insurance market in Ukraine and develop a guarantee facility to support this rebuilding effort. 

Earlier this week (31 October 2023), the UK government signed its own statement of intent to support a European Bank for Reconstruction and Development (EBRD) war risk insurance scheme for Ukraine, committing to supporting UK firms to do business in the country and support its reconstruction. 

Private sector firms will be crucial to efforts to rebuild the country, but the architects, engineers and construction companies that will carry out this work currently struggle to secure the insurance they need to operate in a warzone. 

“That’s where the government comes in,” said business and trade minister Timothy Minto. 

“We are committed to breaking down the barriers that get in the way of UK companies offering their expertise.” 

A vital role to play

The UK government’s support for the EBRD war risk insurance scheme will rely on traditional risk transfer mechanisms and will firstly focus on protecting the transport of cargo, before expanding to other sectors as the scheme develops. 

The UK government’s backing for this scheme is part of its commitment to humanitarian support in Ukraine, but also demonstrates its recognition of the importance of the insurance sector. 

In a previous piece back in May, I argued that the insurance sector should shout much louder about the good it does and it is positive to see the government’s recognition of this, despite the difficult circumstances.

Providing the the vital protection needed to the people rebuilding a country while a war rages is perhaps the perfect example of what insurance can do at its very best. 

It’s easy to get lost in the day-to-day of what working in insurance is like – but it is worth remembering that, when the sticks are down, it is our sector that supports people, businesses and even countries, to get back on its feet after disasters.

And with this month’s Big Question feature revealing a widely held misconception that our sector is boring, this sort of story can only help to improve its reputation.