To ensure the functioning of the military risk insurance system, the Cabinet of Ministers of Ukraine will establish a State Agency responsible for their insurance and reinsurance.
This provision is enshrined in draft law No. 12372 "On the Military Risk Insurance System," registered in the Verkhovna Rada on December 30, 2024, authored by a group of Members of Parliament.
According to the document, the State Agency is to be created in the form of a joint-stock company operating on a commercial basis. Its founders will include the state represented by the Cabinet of Ministers of Ukraine, holding at least 50% + 1 share, as well as international financial organizations, the acquisition or increase of which requires prior approval from the National Bank of Ukraine in accordance with its established procedures.
The governing bodies of the State Agency include: the general meeting of shareholders, the supervisory board, and the management board. The number of members on the supervisory board is determined by the general meeting of shareholders but cannot be fewer than five members, including independent members of the supervisory board.
Representatives of international financial organizations may be included in the supervisory board. Its composition is formed for a term of four years. The same individual cannot be a member of the supervisory board for more than two terms.
The competencies of the supervisory board include, in particular, the approval and monitoring of the financial plan, including the financing of risk management functions, compliance monitoring, internal audit, ensuring the operation of a comprehensive and adequate internal control system, approval of the organizational structure of the State Agency, approval of the list of authorized insurers in the military risk insurance system, approval of the list of insurance intermediaries entering into insurance contracts for military risks on behalf of the State Agency and by its order, and approval of standardized insurance products.
The number of members on the management board is determined by the supervisory board but cannot be fewer than three individuals. The management board consists of a chairman, his deputies, and board members elected by the supervisory board. The management board is responsible for managing the current activities of the State Agency.
According to the draft law, participants in the military risk insurance system include insurers, authorized insurers, as well as insurance intermediaries and insurers authorized to provide intermediary services, non-resident reinsurers, and the State Agency.
It is also proposed to introduce a three-tiered military risk insurance system. At the first level of the system, unless otherwise specified by the military risk insurance procedure, the authorized insurer is responsible for the obligations under the insurance contract within the limits of its own retention, while transferring to the State Agency the obligations under the insurance contract that exceed its own retention limit.
At the second level of the military risk insurance system, the State Agency, depending on the participation conditions of authorized insurers and non-resident reinsurers in the military risk insurance system and the limits of their own retention, will be responsible for the obligations under the insurance contract concluded through insurance intermediaries on behalf of the State Agency, within the limits of its own retention, and will transfer military risks under insurance (reinsurance) contracts to outgoing reinsurance (cession, retrocession).
At the third level of the military risk insurance system, non-resident reinsurers are liable under the reinsurance contract within the limits of their own retention determined by the military risk insurance procedure and the reinsurance contract.