Global insurers and reinsurers generally have little direct business or investment exposure to Ukraine and Russia, according to a report Friday from Moody’s Investor Services Inc.
The insurance industry, however, could face secondary impacts of the conflict including greater financial market volatility and higher energy prices.
Insurance penetration in Ukraine and Russia is low, particularly among international insurers, and the Russian and Ukraine insurance markets are dominated by local insurers. Further, most insurance lines of business carry war exclusions in their contract language.
Some property/casualty and reinsurers could experience “moderate” losses from both market volatility and underwriting from a few specialty lines including political/sovereign risk insurance and trade credit insurance. “Public equities were hit particularly hard across the globe both on the run up to the invasion, and immediately following, although some indices have partially recovered,” Moody’s said.
Among the wider fallout from the conflict, higher energy and commodity prices could drive claims inflation for insurers. The conflict could also lead to further supply chain disruptions and higher property repair costs.
Exports from Ukraine and Russia that are used in property or vehicle repairs include lumber, petroleum products, iron, chemicals, platinum, aluminum and auto parts, Moody’s said.
There may also be a heightened risk for cyber insurers as the conflict raises the risk of worldwide cyberattacks against critical infrastructure assets, along with a possible further escalation and increased frequency of cyberattacks against private companies and other organizations.
Moody’s notes that while cyber insurance policies generally contain war exclusions, “language is inconsistent across the market and world, and how these exclusions would apply to affected parties outside Ukraine can be complex.”
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Political risk insurers face $2 billion exposure to Russia-Ukraine war
U.K.-based consultancy firm Peel Hunt LLP estimates the insurance industry’s political risk exposure in Ukraine and Russia at $2 billion which could amount to sizeable losses for certain insurers, Reinsurance News reported. According to several analysts, political risk, aviation war, trade credit, and marine cargo and war insurance lines are highly exposed to the ongoing war between Russia and Ukraine.
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The insurance industry is struggling to gauge the cost of Russia's war with Ukraine a year after the conflict began. Exposures far removed from the war itself have been unearthed, while insurers are unable to count the cost of claims across their political risk, marine and aviation business lines.
Issue: Reinsurance, often referred to as “insurance for insurance companies,” is a contract between a reinsurer and an insurer. In this contract, the insurance company—the cedent—transfers risk to the reinsurance company, and the latter assumes all or part of one or more insurance policies issued by the cedent.
At the outbreak of the invasion, predictions were that the war would significantly increase cargo and marine premiums. That came to fruition at the end of May when it was reported that premiums for certain aviation and marine activities had increased by 100% or more.
LONDON, July 17 (Reuters) - Insurers are reviewing whether to freeze cover for any ships willing to sail to Ukraine after Russia on Monday quit a U.N.-backed deal that allows the export of grain through a wartime Black Sea safe corridor, industry sources said.
It addresses direct impacts of the war on the industry, such as losses arising in certain specialty lines and restrictions on the provision of insurance services, and indirect impacts, such as increased macroeconomic and financial market volatility, that in turn affects insurers.
As a result of the ongoing conflict, the insurance market in Ukraine, which has annual premiums of c€550M, has seen the number of insurers trading in the country fall from a high of 209 in 2021 to 115 by June 2023.
Insurance is a legal agreement between an insurer and an insured in which the former guarantees to defend the latter in the event of damage or death. Reinsurance is the insurance a firm purchase to lessen severe losses when it decides not to absorb the entire loss risk and instead shares it with another insurer.
Reinsurance is one part of the insurance industry. It involves one or more insurance companies that assume the risk portfolio of another insurer. Put simply, reinsurance is the process where one insurance company spreads the risk to other insurers (called reinsurers) who purchase policies.
The Russia/Ukraine Conflict has had a deep impact in marine insurance premium rates, which were doubled during 2022, while in 2023 several marine insurance P&I clubs are cancelling war-risk coverage across Russia, Ukraine, Belarus and the Republic of Moldova, leaving shipping companies liable for substantial losses ...
Insurance companies typically won't cover damages caused by war for clear reasons. If war breaks out in a country, it could cause a catastrophic amount of damage that would likely bankrupt the insurance company if it were on the hook to cover such damages.
War in Ukraine risks seeing 90 per cent of the country “freefall into poverty” and extreme vulnerability, nearly three weeks since Russia invaded its neighbour, a new UN report said on Wednesday.
American Club also insures ships that transport Russian crude. The US, the UK, the European Union and others imposed sanctions on that country after its invasion of Ukraine in 2022. The policy banned the use of Western services on shipments of crude priced above a $60-a-barrel cap.
Marine insurance safeguards these assets against perils like fire, theft, collision, and damage caused by natural hazardous. The financial protection offered by insurance ensures that businesses can recover from unexpected losses and continue their operations.
By Dec 31, 2022, 707 documented assaults had occurred, including damage to 218 hospitals and clinics (almost 9% of the country's hospitals), 181 assaults on other health facilities (such as pharmacies, blood centres, dental clinics, and research institutions), 65 attacks on ambulances, and 86 attacks on medical ...
The Russia/Ukraine Conflict has had a deep impact in marine insurance premium rates, which were doubled during 2022, while in 2023 several marine insurance P&I clubs are cancelling war-risk coverage across Russia, Ukraine, Belarus and the Republic of Moldova, leaving shipping companies liable for substantial losses ...
Ukraine's economic output is now at a fraction of its pre-war levels. In the first year of the conflict, the country lost 30-35% of GDP. This led to the largest recession in Ukraine's history (see Figure 1). Its GDP is projected to grow in 2023, if only by 0.5%.
Russia-Ukraine Conflict Gives Rise to Global Risk Exposure in Capital Flows, Trade, Commodity Markets. Geopolitical tensions between NATO and Russia have been high for some time. Russia's invasion of Ukraine has NATO-Russia-relations at their most precarious since the cold war.
Introduction: My name is Kareem Mueller DO, I am a vivacious, super, thoughtful, excited, handsome, beautiful, combative person who loves writing and wants to share my knowledge and understanding with you.
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