A draft law on war risk insurance will be submitted to the Verkhovna Rada of Ukraine this year, National Bank of Ukraine Governor Andriy Pyshnyi assured during a meeting with insurance market representatives.
“It is important that in 2025 Ukraine has a stable institutional framework for the development of this area, which will strengthen not only the insurance market but also the country’s economy as a whole. This will create additional protection for business operations,” the NBU Governor said.
The NBU is finalizing a draft law on the creation of a full-fledged military insurance system, which will initially focus on retail insurance for legal entities and individuals. The memorandum with the International Monetary Fund (IMF) under the third review of the Extended Fund Facility (EFF) program provided for the NBU to take 13 steps to strengthen and deepen the financial and capital markets. One of these steps is for the regulator to prepare a draft law on the creation of a full-fledged military insurance system.
The new draft law has passed the final stage of preparation and received the approval of the Financial Stability Council. The document will soon be presented to international partners, business representatives and insurers for discussion. In particular, consultations with insurance business associations and financial market participants are planned for the end of September.
Thus, at its meeting on August 22, 2024, the Council reviewed systemic risks in the financial sector. According to the review, the volume of hryvnia customer accounts is growing in all groups of banks, and lending to businesses and households is reviving in response to positive economic trends. At the same time, the state budget’s needs to finance the security and defense sector are growing.
The war remains a key challenge for the resilience of the financial sector and the economy, and it has increased challenges, in particular for financing and the state budget. The FSC members agreed on the need to continue working together to overcome these challenges and maintain macroeconomic stability.
During the meeting, the RFU supported the draft law on the creation of a fully functional war risk insurance system in Ukraine, the development of which is envisaged by clause 62 of the Memorandum on Economic and Financial Policies between Ukraine and the International Monetary Fund.
According to the Memorandum, the NBU, together with the Ministry of Economy and the Ministry of Finance, was to prepare an initial draft law. A working group set up under the Council of Ministers has completed its development in accordance with the concept note agreed at the Council of Ministers meeting on February 5, 2024. The draft law has been approved by the working group and reviewed by the World Bank experts and will be submitted to the Verkhovna Rada of Ukraine after a broad discussion, including with representatives of the business community.
The draft law envisages the introduction of mandatory insurance for certain objects and voluntary insurance for those that are not subject to mandatory insurance. Standardized products will be developed by the State Agency for War Risk Insurance, established as a joint-stock company under the jurisdiction of the Cabinet of Ministers through the Ministry of Economy. State regulation and supervision of the agency will be carried out by the National Bank.
The Council of Ministers also decided to establish a working group to develop proposals for amendments to the legislation on the deposit guarantee system in terms of corporate governance and the functioning of the administrative board of the Deposit Guarantee Fund, the internal control system, and the appointment of the DGF Managing Director, pursuant to clause 57 of the Memorandum with the IMF.