Insurance key to accelerate investments and support Ukraine’s recovery: Doyle & Sobolev

In a recent discussion, John Doyle, CEO of Marsh McLennan, and Oleksii Sobolev, Ukraine’s First Deputy Minister of Economy, addressed the critical need for insurance solutions to support Ukraine’s economy during the ongoing conflict and to pave the way for post-war reconstruction.

During this year’s Ukraine House Davos, Doyle emphasised the importance of developing a reliable security framework for Ukraine, one that will not only encourage the return of its people and enable rebuilding but also provide the necessary assurance for the insurance industry to operate effectively.

He highlighted Marsh McLennan’s commitment to Ukraine, citing the creation of a Black Sea shipping facility that has helped maintain the resilience of the Ukrainian economy.

Doyle also highlighted the importance of data in assessing and managing risk, stating: “Data underpins how we advise clients, it informs how insurance companies take risk.

“Our colleagues at Oliver Wyman have been working with the Ukrainian government to develop a war risk data platform. That data is driving conversations about big parts of the country that have not been impacted about asset classes that are not nearly at risk.

“Despite the challenges of the current conflict, some things are being insured. Understandably, many investors and insurance companies have withdrawn from the market, however, we are trying to build a foundation. The products we’re developing are a signal to the market of our commitment and a first step towards rebuilding confidence.”

According to Doyle, multinational insurers are interested in entering or coming back to the Ukrainian market, but to do so, they “want a healthy regulatory framework that can underpin risk-taking,” and that “allows them to price risk appropriately and operate with confidence.”

He emphasized the need for a healthy dialogue between the government and the insurance industry to establish such a framework.

During the discussion, Minister Sobolev emphasised the importance of insurance to help accelerate investments and support Ukraine’s economic recovery.

He stated: “What we see is that the reconstruction for Ukraine needs hundreds of billions. We also know that there is not sufficient public money that’s going to cover this bill. So, a lot of the funding is going to have to come from the private sector. But a few steps need to be taken to attract that private sector.

“For example, we calculated that for us to achieve sustainable growth until 2030 we need around $100 billion foreign direct investment (FDI). This FDI will not come without insurance on them, and insurance is something very particular. An example of how the government has gotten involved is the collaboration of the Ministry of Economy in developing the Unity Facility.”

The Unity Facility facility was established through a public-private partnership (PPP) – a joint effort between the Ukrainian government, Marsh McLennan, and global insurers – in which the Ukrainian government provided a $20 million indemnity fund to supply affordable war risk insurance for ships traveling to and from Ukraine.

Sobolev continued: “While not many companies used the facility, it led to a significant drop in insurance rates. This allowed businesses to resume grain shipments from Ukraine, demonstrating the market’s ability to function effectively without the facility’s direct intervention. We are now reallocating those funds to develop other insurance products.

“This example highlights how insurance can facilitate crucial activities. The government’s willingness to absorb initial losses provided the necessary confidence for the market to operate. We have secured sufficient donor funding and commitments, including allocated budget, to create further insurance solutions. However, effective development requires collaboration with the insurance market and the private sector to identify their specific needs.”

Both Doyle and Sobolev acknowledged the challenges posed by the withdrawal of international re/insurers from Ukraine. Sobolev urged the industry to adopt a more evidence-based and nuanced approach, recognizing that not all areas of Ukraine face the same level of risk.

He also highlighted the efforts of the European Union to support the establishment of a war insurance scheme, with a pilot phase expected to launch in the coming months.

The discussion highlighted the urgent need for collaboration between the Ukrainian government, the insurance industry, and international partners to develop comprehensive insurance solutions that will support Ukraine’s economy during the war and enable its successful reconstruction in the aftermath.

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