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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As a result of the influx of claims, the insurance industry has seen an increase in premiums in specific industries like aviation, marine, energy, and cybersecurity, which have been the hardest hit industries during the Russia-Ukraine conflict.
With charters being cancelled due to the conflict, shipowners were left with a tough decision. They had to either avoid paying additional premiums, risking the non-reinstatement of their war risk cover, or attempt to negotiate lower premiums by reducing the vessel's insured sum.
Currently, insurers offer more than 100 types of insurance, the most popular of which are compulsory motor third-party liability insurance (OSAGO), accident and health insurance, and property insurance.
The Russian general insurance industry is set to grow at a compound annual growth rate (CAGR) of 8% from RUB1. 8 trillion ($20.9 billion) in 2024 to RUB2.5 trillion ($26.9 billion) in 2028, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.
The disruption of supply chains originating from these countries has resulted in shortages and price spikes in global markets. Industries dependent on these essential commodities, such as food production and manufacturing, are grappling with supply chain disruptions, hampering their operations and increasing costs.
The researchers found while services related to emergency medical care increased, there were reductions in the number of hospitals offering laboratory testing (13 percent), tobacco education (13 percent), cancer screening (24 percent), gynecological services (26 percent), rehabilitation services (27 percent), pharmacy ...
Is War Covered by Standard Insurance Policies? Standard insurance policies usually exclude war as a covered peril because related damage is unpredictable and difficult to anticipate. Insurance companies base their rates and coverage limits on definable risks.
The war has thus pushed 7.1 million more people into poverty, undoing 15 years of progress. Further, Ukraine is now one of the most food-insecure countries in the world, despite being one of the world's biggest exporters of crops, such as maize, barley and wheat, before the war.
As of January 2024, there were almost 250,000 damaged and destroyed buildings, with 222,000 being private houses, over 27,000 apartment buildings, and 526 dormitories. Direct damage to these facilities is estimated at $58.9 billion. Compared to the report at the end of 2023, this amount has increased by $4.8 billion.
Alone, the U.S. made up almost 58 percent of the entire insurance market in 2022. The five largest markets in 2022 combined held a market share of more than 80 percent.
New York is the state with the highest average car insurance rates at $8,232 per year for full coverage and $2,490 per year for minimum coverage. The state with the lowest average full-coverage car insurance rates is Maine with rates of $1,460 per year.
Services-providing industries have been slowing for 35 months and slowing at a faster rate since February 2021. The Russia-Ukraine war will aggravate already strained logistics routes in the Black Sea. For example, ports have been increasingly strained from a surge in imports and labor shortages.
The response across financial markets was dire. In a month, the Dow Jones and the S&P 500 fell by 35% and the volatility of the financial markets was comparable to the 2008 GFC (Baker et al., 2020).
The war in Ukraine has also resulted in significant loss of human capital, destruction of agricultural trading infrastructure, huge damage to production capacity, including through the loss of electricity, and a reduction in private consumption of more than a third relative to pre-war levels.
According to the UN, the Russian invasion forced 12 million into displacement; 2.9 million more people plan to flee. According to the latest WHO survey, 2 of 5 households have at least 1 member with a chronic disease. Nearly one-third of those people suffered from a lack of health-care services.
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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