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Rebuilding Ukraine Part 2: Funding and Insurance

May 2023
Antony Smith, Ben Couldrey and Kathryn Eva

On 23 March 2023, the UK signed a pivotal digital trade deal with Ukraine, that will support Ukraine’s economy and enhance the UK-Ukraine trade and investment relationship. Furthermore, the UK Government is currently compiling a list of priority projects where it is felt that UK businesses can help Ukraine. The focus of this list is to allow for the planning and rebuilding of Ukraine’s critical infrastructure network such as bridges, housing, and hospitality.

With the prospect of ongoing military conflict therefore seeming inevitable, the objective reader could be forgiven for thinking that the notion of ‘re-building’ a war-ravaged Ukraine seems premature, if the war’s destruction is not yet over.

Part 1 focused on the contract risks to be considered when working on re-build projects in Ukraine.  In this article, we touch upon the funding required to start the rebuild of Ukraine along with insurance implication of the same.


Despite the ongoing war, the Ukrainian government is in discussions with EU commissioners about its desire for EU countries’ export credit agencies to fund the reconstruction by expanding credit limits for rebuild projects. Furthermore, the World Bank is taking a leading role as provider or facilitator of much-needed finance to fund the reconstruction efforts.

Anna Bjerde, Managing Director of Operations at the World Bank, has cited the immediate need of Ukraine to “keep conducting emergency repairs to roads, bridges, hospitals, power plants and energy distribution grids to improve living conditions for its embattled citizens and sustain trade and economic activity.” Bjerde also confirmed that the World Bank, in co-ordination with the Ukrainian government, “has identified priority projects for immediate action to repair damaged infrastructure and launched the Ukraine Relief, Recovery, Reconstruction and Reform Trust Fund (URTF) to channel grants from international donors through rapid transfer mechanisms, with strong oversight in place to ensure that funds are allocated and used effectively.

In February 2023, it was reported that the European Bank for Reconstruction and Development (EBRD) and the Multilateral Investment Guarantee Agency (MIGA) signed a landmark first co-financing agreement.  Under this agreement, MIGA will issue up to US$ 200m in trade finance guarantees to the EBRD to take part of the EBRD’s risk under its Trade Facilitation Programme. The first country to benefit from this agreement will be Ukraine.

In April 2023, it was reported that the U.S. International Development Finance Corporation and the U.S. Agency for International Development signed a Memorandum of Understanding (MOU) with the Government of Ukraine. The purpose of this MOU is to support attracting investments to Ukraine as part of everyone’s efforts to help address Ukraine’s urgent development priorities and economic recovery.  It is hoped that such vital investment will kick-start rebuild projects in Ukraine.

Needless to say, Ukraine will be relying on the support of the rest of the World when it comes to the financing of the rebuild of Ukraine, particularly given the ever increasing predicted cost of reconstruction.  Of course, the requirements of funders and investors will need to be carefully considered when entering into the contract.

More information on funding initiatives and procurement is provided in Part 3 of the Rebuilding Ukraine Series.


The impact of the conflict in Ukraine on the insurance industry is thought to be considerable, and has highlighted the need for the industry to protect against emerging risks. Aside from the contract risks and funding of the project, which will need to be considered, it will be vital that adequate insurance is in place on each project.

Amongst the first considerations for businesses will be how they insure their employees, assets and the Works (if so required) when military conflict is still a live proposition.

Businesses will ask: what terms of insurance will be available; will businesses be asked to insure (and to what extent); and what exclusions will apply considering the ongoing conflict with Russia will be classed as a ‘known risk’?

Deputy Prime Minister & Minister for Economic Development & Trade, Yulia Svydyrenko, has stated that Ukraine has taken advice from the US, UK and EU as to providing state-backed wartime insurance to supplement private insurance companies.  The current concern being that the war risks are too expensive for private insurers to absorb, resulting in higher premiums and creating a potentially unstable insurance market.

Additionally, it is rumoured that the Ukrainian government is in discussions with the World Bank’s Multilateral Investment Guarantee Agency (MIGA) and the U.S. International Development Finance Corporation (DFC), in relation to the provision of insurance tools for companies who wish to work on projects in Ukraine.

As mentioned in Part 1 of the Rebuilding Ukraine Series, businesses will want to ensure that all exclusions and other limitations in their insurance policies are reflected in the contracts they sign. Businesses would also be best advised to seek to limit liability under the contract in line with the constraints of their insurance policies so not to expose the business to the prospect of uninsured losses.

We are yet to see how the insurance market will fully respond to re-build projects in the Ukraine. It is clear that the war in Ukraine has highlighted the essential need for building resilience against current and emerging risks.  This is likely to come at a cost.  However, if the risks posed by further or ongoing conflict are shouldered by the Ukrainian state, it is hoped that the insurance market (like the credit market) for such projects will not be too problematic.

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