---
title: "Ukraine Prepares a Multi-Billion-Dollar Insurance Fund to Save Businesses from the Aftermath of Shelling"
description: "Ukraine's Economy Minister Alexander Kravchenko stated that business losses from Russian attacks could reach 10 billion dollars in 2026. The Cabinet of Ministers is preparing a \"first loss\" insurance fund with coverage of up to 10 million dollars per enterprise, which may be funded through a VAT increase."
date: 2026-09-12T10:56:01.000Z
lang: en
url: https://xab.info/en/posts/ukraine-insurance-fund-business-losses-10-billion
tags: [ukraine-economy, insurance-fund, war-damage, vat-increase, business-support, kravchenko]
publisher: "XAB.info"
---

# Ukraine Prepares a Multi-Billion-Dollar Insurance Fund to Save Businesses from the Aftermath of Shelling

![Business executive at a conference discussing the creation of an insurance fund to protect Ukraine's businesses from the consequences of shelling](https://xab.info/media/2026/09/12/ukraina-strahovoy-fond-biznesa-ubytki-10-mlrd/ukraina-strahovoy-fond-biznesa-ubytki-10-mlrd-1.webp)

## 🎯 Key Points

- Losses to Ukrainian businesses from Russian attacks could reach 10 billion dollars in 2026
- The Cabinet of Ministers is preparing a "first loss" insurance fund with coverage of up to 10 million dollars per enterprise
- The fund's starting capital is estimated at 2–3 billion dollars, with a VAT increase under consideration as one source of financing
- The launch of the mechanism is planned for 2027, subject to finding sources of financing

In 2026, the cumulative losses of Ukrainian businesses caused by systematic missile and drone attacks by Russia could reach the mark of 10 billion dollars. This was stated by Ukraine's Minister of Economy and Environment, Alexander Kravchenko, in an interview published by RBC-Ukraine. According to him, the scale of the losses is unprecedented for the domestic economy under conditions of an ongoing war. The government recognizes that the existing support instruments — loss compensation programs, preferential lending, and the "5-7-9" mechanism — are unable to cover the needs of the entire entrepreneurial sector. In fact, these programs work predominantly for small and medium-sized businesses, while large and mid-sized enterprises remain largely without systematic protection.

### Two Systemic Problems of the Insurance Market

Kravchenko highlighted two key systemic limitations the government has faced. The first is that the cost of insurance is critically high for businesses. The second is that the volume of available reinsurance is extremely limited and has, in essence, run dry. The Ukrainian insurance market is currently underpinned mainly by reinsurance abroad, in particular through Lloyd's in the United Kingdom. However, reinsurers' portfolios are limited, highly risky, and not diversified. Combined with the state's fiscal constraints, this creates a situation in which neither the market nor the budget alone can provide adequate coverage of war risks for all businesses.

### The "First Loss" Mechanism: How the Insurance Fund Will Work

One of the key solutions being worked out by the Cabinet of Ministers is the creation of a state insurance fund that covers the so-called "first loss," i.e. the initial risk. The model provides for an insurance compensation of up to 10 million dollars per enterprise. The logic of the mechanism is simple: the state cannot compensate 100% of the losses to every affected enterprise, but it can create a system that guarantees businesses a starting capital for rapid recovery. According to Kravchenko, such funds will allow critical equipment to be restored quickly, jobs to be preserved, contracts to be kept, and operations to resume as soon as possible. The cost of such insurance will be 2% of the coverage amount within the established limit. Since the state will assume the first risk, the final cost of the policy for businesses will be significantly lower than the market rate, ensuring much broader coverage. By design, the insurance market will be able to step in and reinsure all other risks beyond the state limit.

### Funding: From Starting Capital to a VAT Increase

The compensation fund will be funded from several sources. At the start, according to the minister's estimate, capital of 2–3 billion dollars is required — a sum that Ukraine will have to provide from its own budget. International donors should then join the financing. Among the options for funding the fund, one of the most realistic currently under consideration is an increase in the VAT rate. Kravchenko explained the choice by noting that, in terms of the scale of the resource, administration, and speed of mobilizing funds, this instrument allows the minimum necessary funds to be raised quickly so that Ukrainian businesses can withstand intense shelling during the winter period. According to him, discussions with international partners take time, and the more serious the position of the Ukrainian side and its readiness to co-finance, the higher the chances of attracting substantial funds from partners.

### Timeline and Launch Conditions

In terms of the timeline, the government aims to launch the mechanism in 2027, provided that sources of financing can be found. Kravchenko emphasized the need to significantly strengthen corporate governance and the transparency of the fund's resource use. In his assessment, all sectors must find a compromise to save the economy under current conditions. The minister acknowledged that the path will be difficult, but insisted: a step forward must be taken now, since discussions with international partners require time, and every month of delay increases the cumulative losses of businesses.

### Contradictory Data

In Kravchenko's main statements conveyed to RBC-Ukraine, the fund's starting capital is estimated at 2–3 billion dollars. However, a number of specialized publications, in particular Inventure, use the figure of 3–4 billion dollars in headlines and analytical materials, describing the total volume of the "first loss" fund. The difference in figures may be due to the fact that in the first case the reference is exclusively to the initial state contribution, while in the second it is to the cumulative target volume of the fund taking into account donor co-financing. The exact parameters and final size of the fund were not fixed in a legislative act at the time the statement was published, as the mechanism is at the stage of development and coordination with the Ministry of Finance, international financial organizations, and the relevant committees of the Verkhovna Rada.

## 🔍 Fact-Check Verification

- [Ukrainian businesses could lose 10 billion dollars; Cabinet of Ministers seeks support options — Kravchenko](https://www.rbc.ua/ukr/news/ukrayinskiy-biznes-mozhe-vtratiti-10-mlrd-1789210277.html) - Прямое заявление министра экономики Кравченко с деталями механизма first loss, стоимостью 2% от покрытия, лимитом 10 млн долларов, стартовым капиталом 2–3 млрд долларов и вариантом финансирования через НДС.
- [Ukraine to create a $3–4 billion first-loss fund to cover businesses' war losses](https://inventure.com.ua/news/ukraine/ukraina-sozdast-fond-first-loss-na-dollar34-mlrd-dlya-pokrytiya-voennyh-ubytkov-biznesa) - Подтверждает факт проработки фонда first loss, однако в заголовке фигурирует сумма 3–4 млрд долларов, что расходится с 2–3 млрд в заявлении Кравченко. Возможно, речь о совокупном объёме с донорским софинансированием.

## ❓ FAQ

### Q: What is the maximum compensation amount provided for in the new insurance fund?
**A:** Under the model outlined by Minister Kravchenko, the insurance compensation will be up to 10 million dollars per enterprise within the established coverage limit.

### Q: How much will such insurance cost businesses?
**A:** The cost of insurance will be 2% of the coverage amount within the established limit. Since the state assumes the first risk (first loss), the final cost for businesses will be significantly lower than the market rate.

### Q: When is the launch of the mechanism planned?
**A:** Kravchenko pointed to 2027 as the target launch date, provided that sources of financing can be found. He emphasized that the launch should happen as quickly as possible so that businesses can withstand the winter period of shelling.

### Q: Which funding option for the fund is considered the most realistic?
**A:** Among the options under consideration, Kravchenko named an increase in the VAT rate as one of the most realistic, since this instrument allows funds to be mobilized quickly in terms of scale, administration, and speed of funding.

### Q: Why are the existing support programs falling short?
**A:** According to Kravchenko, the existing compensation programs, preferential lending, and the "5-7-9" mechanism work predominantly for small and medium-sized businesses and are unable to cover the needs of the entire entrepreneurial sector, especially large enterprises.