The damage to the Ukrainian economy from the consequences of military operations in 2026 has reached a massive milestone of 10 billion dollars. Faced with the urgent need to support entrepreneurs, the Cabinet of Ministers of Ukraine plans to launch a specialized war risk insurance fund. This mechanism is designed to become a key tool for restoring destroyed infrastructure and ensuring the minimum stability of the commercial sector amid ongoing security challenges.
Why the private market cannot cope
As Minister of Economy and Environment Oleksandr Kravchenko stated in an interview with Forbes, insurance is currently the number one request during meetings with the business community. In ideal conditions, the government would prefer to rely entirely on market mechanisms, but the Ukrainian insurance market in its current state does not have sufficient capacity to cover such large-scale risks. Private companies and international reinsurers are simply not ready to take responsibility for facilities in high-risk regions, whether they are gas station complexes in the Poltava region or logistics warehouses in Brovary.
Sources of funding and the controversial VAT decision
To create a working mechanism, the government has to resort to unpopular fiscal measures. State funding for the new fund is planned to be provided by increasing the value-added tax (VAT). According to estimates by the National Bank of Ukraine, such a step could add from 0.4% to 0.7% to inflation figures over the year, but in wartime conditions, the economic block considers this the lesser of evils. It is expected that this measure will attract about 1 billion dollars as a starting contribution to the compensation fund, which will take on the primary coverage of losses (first loss).
Conditions of participation and business restrictions
The new fund will operate on the principles of voluntary insurance contributions without strict restrictions on industries or the geographical location of enterprises. It is planned to insure physical assets such as manufacturing plants, warehouses, and gas stations, excluding finished products. At the same time, a clear limit is set — no more than 10 million dollars per object. In addition, the government emphasizes that hyper-concentrated critical infrastructure facilities, including nuclear power plants and large energy facilities, will not be insured within this fund.
Controversial data
The expert community and media are actively discussing the scale and consequences of the planned fiscal maneuver. On the one hand, the relevant ministry insists on the inevitability of raising VAT as the only quick way to mobilize the necessary resource of 1 billion dollars. On the other hand, independent economists and business representatives express serious concerns about additional pressure on the legal sector of the economy, which is already suffering colossal losses. Discussions arise about whether the tax burden could provoke part of the business to go into the shadows, neutralizing the positive effect of the insurance fund itself.
