The Fuel and Energy Business Association and the League of Insurance Organizations of Ukraine have signed a Memorandum of Cooperation on the development of war risk insurance mechanisms for enterprises in the fuel and energy sector.
War risk insurance today is not only a financial protection tool for an individual enterprise, but also a necessary component of Ukraine’s economic resilience. For the fuel industry, this issue is of particular importance: damage or destruction of gas stations, tank farms, warehouses, logistics, and other fuel infrastructure directly affects the supply of fuel to the population, emergency services, defense forces, medical institutions, municipal enterprises, and businesses.
The main goal of the cooperation is the development, testing, and implementation of a single, economically balanced war risk insurance mechanism that will take into account the interests of the fuel business, insurance companies, and the state.
“Fuel industry enterprises continue to operate even in regions with an extremely high level of danger, daily meeting the vital needs of communities. However, without effective insurance protection, each facility damage can mean not only the loss of business, but also the cessation of fuel supplies to an entire territory. Therefore, our task is to create, together with the insurance market and the state, a real mechanism that will help enterprises not only recover from attacks, but also continue to operate and invest in the protection of fuel infrastructure,” noted Tetiana Dumenkova, Deputy Head of FEBA.
According to Viktor Berlin, President of the League of Insurance Organizations of Ukraine, existing insurance solutions do not fully correspond to the scale, nature, and concentration of war risks in the fuel sector.
“The high probability of significant losses, the territorial concentration of risks, and limited reinsurance capabilities complicate the formation of an affordable and at the same time economically justified insurance product. We recognize the need to combine the expertise of the fuel business and the insurance market, as well as to involve the state, regulators, international partners, and reinsurers in creating a systemic mechanism of insurance protection for fuel infrastructure,” emphasized Viktor Berlin.
Joint work will include:
- analysis of the real needs and risks of fuel industry enterprises;
- formation of a geographically diversified insurance portfolio;
- development of coverage terms acceptable to businesses and insurers;
- elaboration of co-insurance and reinsurance mechanisms;
- involving the state in the distribution of excessive war risks;
- searching for opportunities for international financial and reinsurance support;
- determination of measures to increase the security of fuel facilities and minimize potential losses.
The future model should provide transparent insurance and loss settlement conditions, take into account the level of protection of each facility, and create a real opportunity to insure enterprises operating in frontline regions and high-risk territories.
The signing of the Memorandum is the beginning of practical joint work between the fuel and insurance markets on a solution that both business and the state need today. Its result should not be a declaration of intent, but an effective insurance mechanism that will help preserve fuel infrastructure, maintain the continuity of fuel supplies, and strengthen Ukraine’s economic resilience.
