--- title: "Ukraine to create a $3–4 billion fund to compensate businesses for war damage" description: "Ukraine's Ministry of Economy is developing a new mechanism to compensate businesses for war damage: it proposes creating a $3–4 billion fund and introducing a First Loss model, under which the state covers the first layer of losses while the business insures the excess risk on the private market." date: 2026-09-18T17:14:00.000Z lang: en url: https://xab.info/en/posts/ukraine-fund-compensation-war-damage-business-first-loss tags: [ukraine, war-damage, business-compensation, first-loss, insurance, ministry-of-economy, war-risk] publisher: "XAB.info" --- # Ukraine to create a $3–4 billion fund to compensate businesses for war damage ![Destroyed industrial facility and an inspector at the site of business damage in Ukraine — war-related losses eligible for compensation](https://xab.info/media/2026/09/19/ukraina-fond-kompensacii-voennogo-ushcherba-biznesu-first-loss/ukraina-fond-kompensacii-voennogo-ushcherba-biznesu-first-loss-1.webp) ## 🎯 Key Points - Ukraine's Ministry of Economy proposes creating a special fund worth $3–4 billion to compensate entrepreneurs for war damage - The First Loss mechanism is being introduced: the state compensates the first layer of damage within a limit, while the business insures the excess risk on the private market - The initiative complements the war-risk insurance program previously expanded by the Cabinet of Ministers and the simplified procedure for payments for destroyed property Ukraine's Ministry of Economy has announced the development of a new mechanism to compensate entrepreneurs for war-related damage. According to RBC-Ukraine, the ministry stated this in its official Telegram channel. The key element of the proposed system is to be a special fund worth between three and four billion dollars, which, as envisioned by its authors, will serve as the financial foundation for reimbursing business losses incurred as a result of hostilities. ### The First Loss mechanism: the state covers the first layer of damage Building on the proposed fund, the Ministry of Economy plans to introduce the so-called First Loss mechanism. Under this model, the state will compensate the first layer of war damage within a pre-established limit. As a result, an entrepreneur whose property has been damaged or destroyed will receive a guaranteed payment from the state without having to prove the loss through a private insurance company. Any risk exceeding this limit can be additionally insured by the business on the private insurance market, which, according to the ministry's assessment, will ease the burden on the state budget while providing entrepreneurs with a more comprehensive level of protection. ### Expansion of the existing war-risk insurance program The new initiative is not an isolated measure. Previously, the Cabinet of Ministers of Ukraine had already expanded the existing war-risk insurance program for businesses and simplified the procedure for obtaining compensation for damaged or destroyed property. In addition, the government is considering amendments to the mechanism for partial compensation of property value and insurance premiums against war risks. Thus, the creation of a $3–4 billion fund and the introduction of the First Loss model logically continue and deepen the reforms already launched in the area of protecting businesses from the consequences of the war. ### Operational model and development partners According to the Ministry of Economy, the financial and operational model of the new mechanism is being worked out jointly with partners, although the full list of co-authors of the project is not disclosed in the available text of the statement. This indicates that work on detailing the model — including the criteria for selecting affected enterprises, the size of limits by business category, and the procedure for interacting with private insurers — is at the stage of active refinement. The final parameters of the fund and the conditions for applying the First Loss mechanism will be approved after the consultations are completed. ### What this means for entrepreneurs For Ukrainian businesses, the new mechanism potentially means a shift from fragmented compensation to a systematic protection model. The guaranteed state "first layer" of payments lowers the barrier to entry into the reimbursement system: an entrepreneur will no longer have to immediately turn to a private insurer, whose war-risk policies are often expensive and do not cover the full range of risks. At the same time, the option to purchase additional private insurance beyond the state limit preserves flexibility and allows large companies to build more comprehensive protection. Experts note that the success of the model will depend on the transparency of selection criteria, the speed of payments, and the sustainability of the fund's financing amid ongoing hostilities. ## 🔍 Fact-Check Verification - [Business war losses: Ministry of Economy developing a new compensation model](https://www.rbc.ua/ukr/news/voenni-zbitki-biznesu-minekonomiki-rozroblyae-1789751331.html) - Единственный доступный источник. Цитирует заявление Минэкономики в Telegram. Подтверждает: намерение создать фонд 3–4 млрд, модель First Loss, расширение действующей программы. Не подтверждает: точный размер фонда (указан диапазон), полный перечень партнёров по разработке, сроки внедрения. ## ❓ FAQ ### Q: What is the size of the proposed war-damage compensation fund? **A:** Ukraine's Ministry of Economy cites a range of three to four billion dollars. The exact amount has not been fixed as of the statement. ### Q: What is the First Loss mechanism in this context? **A:** It is a model in which the state compensates the first layer of war damage to an entrepreneur within an established limit. Losses exceeding this limit can be additionally insured by the business on the private insurance market. ### Q: Has the mechanism already been adopted and is it in effect? **A:** No. As of the Ministry of Economy's statement, the mechanism is at the stage of working out the financial and operational model. The final parameters and implementation timeline have not been announced. ### Q: How is the new initiative related to the existing war-risk insurance program? **A:** The Cabinet of Ministers previously expanded the existing war-risk insurance program for businesses and simplified obtaining compensation for damaged or destroyed property. The new fund and the First Loss model complement and deepen these measures by adding a guaranteed state layer of payments.