The Financial Sector Reform Activity project of the United States Agency for International Development (USAID) has drafted a memorandum of understanding and cooperation in insurance against war and political violence risks in Ukraine.
This initiative aims to involve Ukrainian banks and insurance companies in developing and promoting political violence insurance products in the domestic market.
The MOU lays the foundation for creating approaches to determine insurable political violence risks, based on international practices, and identifies insurance types that would be most in demand by Ukrainian businesses.
The project also plans to create a system for insuring against political violence risks using self-insured retention, drawing from best practices and international experience. This includes encouraging insurers to join the system, providing access to reinsurance coverage, and popularizing political violence risk insurance products.
USAID memorandum implies joint work on the development of political violence insurance products, as well as ensuring the availability of such products for businesses and their promotion on the domestic marketUSAID Financial Sector Reform Activity
The memorandum should be considered as the groundwork for developing further measures to promote cooperation between its participants as part of activities they are allowed to engage in under Ukrainian law, i.e. to develop approaches to determine insurable political violence risks based on international practices and analyze types of insurance that will enjoy the highest demand among Ukrainian businesses.
Furthermore, creating a project for insuring against political violence risks using self-insured retention will rely on the best practices and international experience.
Steps will be taken to encourage as many insurers as possible to join the political violence risk insurance system, including by signing coinsurance contracts.
Ways will be found to provide access to reinsurance coverage with regard to such risks on the local and international markets, and measures will be taken to popularize political violence risk insurance products and to attract a large number of clients, including by increasing insurance coverage and/or reducing insurance rates.
The memorandum can be signed by all Ukrainian insurance market participants (including non-residents authorized to operate as insurers on Ukrainian territory): insurers, reinsurers, insurance brokers and their associations, as well as banks.
Cooperation will take place through delegating their representatives to hold consultations, work out proposals on fulfilling the tasks set in the memorandum, form working groups, and, if necessary, exchange parties’ materials and information.
Insurance market participants and banks can join the memorandum by signing the relevant agreement. The coordinator will have to notify the memorandum’s other signatories of a new member’s accession as soon as possible.
The memorandum will enter into force from the date it is signed by at least two members and will remain valid as long as its signatories are interested in such cooperation.
Any party may terminate its participation in it by submitting a written notification to the coordinator 30 calendar days before the date of quitting the memorandum.
All participants in the Ukrainian insurance market, including non-residents authorized to operate in Ukraine, can join the MOU. This includes insurers, reinsurers, insurance brokers, their associations, and banks.
The collaboration will involve consultations, working groups, and information exchange. The MOU becomes effective once signed by at least two members and will remain valid as long as the parties are interested in cooperation. Parties can terminate their participation by providing 30 days’ written notice