Indirect losses of Ukraine from the war with Russia have exceeded $1 trillion

Analysts from the Kyiv School of Economics point out that the amount of indirect losses for Ukraine since the beginning of the full-scale Russian invasion, including current and projected losses in revenue and added value, is estimated at $1.164 trillion and $385.7 billion respectively. The largest sums of indirect losses in terms of revenue volume concern the productive sectors and agriculture ($83.1 billion). Infrastructure sectors have also suffered significant losses.

In addition to revenue losses, Ukraine's economy is currently incurring substantial additional costs. The largest of these are related to demining ($42 billion) and the housing sector ($22.4 billion). In the housing sector, the main expenses are associated with additional costs for citizens related to housing rent ($15.4 billion). At the same time, the state's expenditures on social benefits have increased and continue to rise, amounting to $10 billion. The dismantling of destroyed facilities and waste removal across all sectors accounts for $13.4 billion. Losses also encompass other sectors, such as healthcare ($11.4 billion), education and science ($14.5 billion), the financial sector ($4.3 billion), culture, sports, and tourism ($7.3 billion), as well as digital infrastructure and the IT sector ($19.3 billion). There is also significant pressure on the economy due to the need to restore housing and communal services, where indirect losses are estimated at $7.7 billion.

To mitigate war risks, the National Bank of Ukraine, in conjunction with the Ministry of Economy and the Ministry of Finance, is currently implementing a nationwide war risk insurance system. The draft law "On the System of War Risk Insurance" aims to protect the insurance interests of individuals and legal entities and is focused on ensuring compensation for losses incurred by such parties as a result of war risks. Currently, according to experts, the lack of coverage for war risks is a significant barrier to attracting investors for the reconstruction of Ukraine and the development of its economy.

The government aims to create a unified insurance system and there are already several functioning tools in this market. For example, the Unity mechanism for insuring vessels is already in operation, where the state has allocated a small portion of capital to cover the first risk, significantly revitalizing the market and reducing rates several times over. The comprehensive nationwide system for insuring war risks will be funded both by accumulated mandatory insurance payments under insurance contracts and by financial assistance from donors. 

It is planned that the system will cover risks of physical damage caused by war, specifically, mandatory insurance will apply to collateralized property and residential construction objects. Consultations are currently ongoing regarding the possible clarification of the list of objects subject to mandatory insurance. In subsequent stages, there are plans to expand coverage to a wider range of objects. In fact, the draft law is expected to be submitted to the relevant committee of the Verkhovna Rada by the end of December this year, taking into account the comments from the business community and representatives of the insurance market.