Russian invasion of Ukraine puts War risk insurance in the spotlight
17 June 2022
The ongoing war in Ukraine and the evolving consequences makes it vital for companies to carefully review their insurance cover to ensure potential War risks are covered.
A report by S&P Global, the ratings agency, says the war could lead to insurance losses of Euros 15.2 billion ($16 billion) – Euros 33.2billion ($35 billion) in so-called "specialty" insurance classes such as aviation, marine, trade credit, political risk and cyber.
War is typically excluded from mainstream insurance policies, however, businesses can buy extra war cover. War risk insurance covers damage due to acts of war, including invasion, insurrection, rebellion and hijacking. Some policies also cover damage due to weapons of mass destruction and is most commonly used in the shipping and aviation industries.
In response to the conflict it has been noted that when renewing a policy, insurers have imposed territorial limitations including seas and waterways impacted by Russia’s invasion. Supply chains have been exposed to risk while the imposition of sanctions has also become a factor.
Companies involved in areas such as trade, energy, finance, agriculture, aviation and shipping are particularly affected by the conflict and it is important to ensure any policy takes into consideration specific risks that have arisen or are likely to arise.
Premiums have risen significantly for aviation and marine business particularly exposed to the war in Ukraine.
Cyber-attacks targeting Ukraine can impact companies in other countries. Care should be taken by insurance buyers to review the extent of any War or Terrorism Exclusion that may feature in their policy. If in doubt they should speak to their broker.
The war also has implications for Directors & Officers (D&O) policies as company boards and management may face scrutiny of their response to the Ukraine conflict as well as affected supply chains. Potential claims could include for material loss of shareholder value resulting from a board’s or management’s decisions, including failures to sufficiently disclose information to shareholders. D&O policies typically do not contain war exclusions.
W Denis place insurance around the world and have direct access to Lloyd’s as well as other international (re)insurance markets, if you wish to discuss your insurance requirements, please visit www.wdenis.eu or contact Vida Jarašiūnaitė firstname.lastname@example.org or Mark Dutton email@example.com