Protecting business in Ukraine: a comprehensive guide to war risk management and insurance

Since the full-scale invasion in February 2022, the insurance market in Ukraine has undergone a fundamental transformation. Initially shocked and paralysed—with foreign reinsurers exiting and local policies excluding war risks—the market has now adapted, and now includes a sophisticated ecosystem of international guarantees, state programmes, and private market solutions.
The following guide outlines multi-layered protection strategies, ranging from the new state compensation mechanism launching 2026 to established international political violence (PV) instruments.

I. Understanding the risk: technical context

Before selecting a mechanism, it is crucial to understand how "War Risks" are defined in insurance contracts to avoid coverage gaps.

• War Risks vs. Political Violence: Standard policies often distinguish between "War" (i.e. hostile acts, military operations) and "Terrorism" (ideologically motivated violence). International "Political Violence" (PV) wordings are broader, often covering revolution, insurrection, and civil commotion.
• Critical exclusions: most standard war-risk policies still exclude:
  • Cyber attacks: often excluded under the "CL380" clause.
  • CBRN: chemical, biological, radioactive, and nuclear risks.
  • Five powers clause: war between the major powers (US, UK, France, China, Russia) is typically excluded from standard reinsurance treaties.

II. Latest development: state support and compensation

The Ukrainian government has introduced a long-awaited procedure for the partial compensation of war damage and war-risk insurance premiums (Resolution No. 1541).

Effective 1 January 2026, this mechanism administered by the Export Credit Agency (ECA) offers:

• Compensation for damages: up to UAH 10 million for destroyed or damaged assets (e.g. buildings, equipment) in high-risk regions.
• Premium reimbursement: partial reimbursement of war-risk insurance premiums—up to UAH 1 million per year—for businesses purchasing policies in Ukraine.

The ECA’s mandate was previously expanded to insure domestic investments against war risks, creating a foundation for this new compensation capability.

III. Private market solutions: the Lloyd’s facility

For broader coverage beyond state limits, private insurance remains essential.

The Ukraine War Risk Insurance Facility (backed by Lloyd’s of London) provides standardised and scalable protection.

• Scope: physical damage from missiles, drones, shelling, and explosions.
• Access: direct access for foreign companies; local access for Ukrainian firms via fronting insurers.
• Precedent: this builds on the success of the UNITY Facility, a USD 50 million public-private partnership launched in 2023 specifically to insure marine war risks for grain exports.

IV. International investment guarantees

For businesses with foreign capital, international instruments offer the most robust coverage (i.e. Political Risk Insurance or PRI).

V. CMS strategic advisory: a multi-layered approach

The legal framework governing insurance in Ukraine was updated with the new Law "On Insurance" (effective Jan 1, 2024), aligning local regulations with EU directives. Navigating this new legal landscape requires a combined approach with legal experts.

CMS helps clients navigate the full spectrum of war-related risk management:

1. Strategic structuring and "patchwork" coverage

• Gap analysis: CMS analyses exclusions (e.g. the "Five Powers" or CBRN clauses) to ensure a business understands its net exposure.
• Hybrid solutions: CMS assists in pairing international PRI (MIGA/DFC) with local coverage for physical assets to minimise uninsured risks.

2. Contractual risk allocation

• Force majeure: Drafting robust clauses that specifically address "hostile acts" and "political violence" rather than just generic "war".
• Evidence preservation: Providing legal guidance on documenting damage to meet the high evidentiary standards of international registers.

3. Claims and compensation

• ECA programme support: Preparing documentation for the new state compensation programme (Asset & Premium reimbursement).
• International arbitration: Structuring claims under Bilateral Investment Treaties (BITs) for uncompensated losses.

Is your strategy up to date?

If your business holds significant assets or operates in high-risk regions, relying on a single instrument is no longer sufficient.

Next Steps

We invite you to contact the CMS Team for a preliminary risk audit. We will assess your eligibility for MIGA/DFC programs, the new ECA compensation mechanism, and private market facilities to build a tailored protection strategy.

For more information, contact your CMS client partner or the CMS experts who wrote this article: Ihor Olekhov.