Insuring reconstruction risk

Conversations about attracting investment to Ukraine usually focus on opportunity, legal framework and tax. Those matter. None of them produce a single project without insurance.

Why insurance is the binding constraint

A contractor cannot mobilise plant and personnel without cover. A lender will not finance an uninsured asset. A board will not approve an investment its auditors flag as uninsurable. Every subsequent decision in the chain waits on the policy.

Commercial insurers will not write war risk in an active conflict on their own account. The loss is not statistically modellable, the correlation between claims is total — one event can trigger every policy in a region simultaneously — and no reinsurance market prices it.

What has been built

Public and multilateral mechanisms sharing the risk: political risk guarantees from multilateral agencies, export credit agencies of partner states covering their own exporters and investors, a domestic scheme covering specified categories, and specialised facilities for shipping and for cargo.

The structure is generally the same: a public body takes the tranche of risk the market will not, and the commercial market handles the remainder. That is what makes the total premium payable.

What still limits it

Capacity, geography and duration. Cover is easier to obtain in the west than near the front, easier for a two-year project than a fifteen-year one, and available in limited total volume relative to demand.

The advice I would give

Establish insurability before anything else. Not the market study, not the site, not the partner. If the risk cannot be covered, the rest of the work is preparation for a project that will not be approved — and finding that out in month one costs a great deal less than finding it out in month nine.

I do not ship without insurance; that is not a preference but a condition set by the bank and the partner. In reconstruction the gate is in exactly the same place: a project without cover does not find financing however good it is. The moment investor interest turns into a project is the moment the premium comes down to a sensible level, and that moment arrives from the insurance market rather than from a tender.