The Cabinet of Ministers of Ukraine has approved a resolution establishing the procedure for providing partial compensation for property of business entities destroyed or damaged as a result of armed aggression by the russian federation, as well as partial compensation for insurance premiums under insurance contracts against war risks.
This decision creates the legal basis for the launch of a new state mechanism to support business, which combines two components:
“Today, it is difficult for businesses to insure their property against war risks – it is expensive, and in frontline territories it is impossible. The Government’s decision should change the situation: where insurance is unavailable, the state will compensate businesses for part of their losses directly through the Export Credit Agency. And where insurance companies operate, entrepreneurs will receive compensation for part of the insurance payment to make the service more affordable,” said Oleksii Sobolev, Minister of Economy, Environment and Agriculture of Ukraine.
The approved decision opens up the possibility for the practical launch of a new support tool. It is another component of the Made in Ukraine policy for the development of Ukrainian producers.
Key provisions of the Procedure:
1. Direct compensation for losses in frontline regions
The mechanism will apply to entrepreneurs operating in high-risk areas – in Dnipropetrovsk, Donetsk, Zaporizhzhia, Mykolaiv, Odesa, Poltava, Sumy, Kharkiv, Kherson and Chernihiv regions. Businesses will be able to receive partial compensation for the cost of damaged or destroyed property – buildings, warehouses, equipment, etc.
The maximum amount of compensation will be up to UAH 10 million, but not more than the actual damage. If the enterprise has already received compensation or assistance from the state or local budget, the amount of compensation will be reduced by the amount of funds received.
Applications will be reviewed by the Export Credit Agency (ECA), which will administer all payments from the state budget. When submitting an application, the entrepreneur pays a one-time contribution of 0.5% of the declared amount of probable damage to the account of the ECA. After receiving compensation, the state acquires the right to claim the corresponding amount of damages from the russian federation.
2. Compensation of part of the insurance payment for businesses throughout Ukraine
In areas where insurance companies are willing to provide business insurance against war risks, the enterprise independently selects such a company, concludes a contract with it and pays the insurance premium (the cost of the policy).
After the contract expires, the business will be able to apply to the ECA and receive compensation for part of the payment made – up to UAH 1 million. A fee of UAH 5,000 is paid to the ECA account for each application.
This will allow entrepreneurs to actually use war risk insurance services, and insurance companies to develop this market segment.
Who can benefit from the mechanism
Individual entrepreneurs and private sector legal entities.
The following cannot participate in the programme: state and municipal enterprises, non-residents of Ukraine, companies under sanctions or linked to russia or belarus, enterprises with tax arrears or in bankruptcy.
Compensation is provided for assets damaged or destroyed after the resolution comes into force, as well as for insurance contracts concluded after that date.
Source: https://www.kmu.gov.ua
