Liga Asuransi – Excellent readership, how are you? War, one of the risks that we fear, has finally happened again. On February 24, 2022, Russia officially declared war on neighboring Ukraine and immediately attacked with various weapons, land, sea and air.
The impact of the Russian attack, various damage has been done. Public facilities such as power plants, gas lines, airports, and residential areas were damaged. Hundreds of lives were lost, thousands were injured and hundreds of thousands were displaced.
The impact of this war will also happen to the economy in the European region and also to the world economy.
In the insurance industry, the risk of war includes risks that are not guaranteed and excluded. Because the risk is great and can not calculate how much damage can occur.
To find out how the world’s insurance industry reacted to the Russia-Ukraine war, here are 3 articles that we got from several trusted sources in online media.
If you are interested in this article, please share it with your friends so that they also understand as you do.
- The insurance industry is calculating the costs of Russia’s invasion of Ukraine.
According to some analysts, the insurance market is exposed in a number of areas, including political risk insurance – Political Risks Insurance (PRI), aviation war risk, trade credit, and cargo/sea war risk. It is understood that the credit insurance and energy markets will also be under pressure.
Analysts at Peel Hunt write about PRIs: “This includes claims relating to expropriations, wars, embargoes and border closures due to government intervention.
It is generally accepted that the total insured for PRI insurance in Ukraine and Russia is $2 billion. Therefore, looks like the potential danger seems manageable, even with single-digit share going to be a sizeable loss for the
market.In light of the events unfolding this week and the picture of the potential impact of the conflict, the same analysts also wrote: “Given that previously the market had insurance had some warning that leads to this conflict, the insurance company has time to deal with the exposure and give notice or set a trigger for a war exemption. “
They added: “In credit insurance, contracts can be canceled overnight. Thus, insurance companies will be able to take steps to limit the risk exposure they may have on their books.
One mitigating factor, says Peel Hunt, is that Lloyd’s has relatively low exposure, around 15%, to Europe. Exposure to eastern Europe, the company said, is likely but not likely to be too great.
“Thus,” they added, “it would be individual contracts written in the area by insurance syndicates that tend to define specific exposures.”
Meanwhile, Peel Hunt said the energy market is relatively large and, at around 4%, one of the core underwriting classes at Lloyd’s.
The analysts added: “Energy markets are likely to be disrupted if this conflict drags on for several months. Oil prices have already risen ahead of this conflict and Brent is now above $100/bbl. Our Oil & gas team reports that production capacity is low due to a lack of investment. in infrastructure for several years.”
Other analysts have pointed to specific areas of the industry. Risk solutions firm Russell Group has demonstrated the impact of the invasion on airlines.
The analysis from the company says that low-cost carriers will have more influence than larger carriers. “Meanwhile,” the company said, “some insurance operators, such as capital markets, are vulnerable to what the Ukrainian government’s infrastructure ministry describes as an “information field.”
They added: “This differentiation in exposure to the Ukraine crisis could ease concerns of aviation insurers. who are scrambling to know the level of risk of their exposure to Ukraine. Insurance coverage has begun to be reduced and withdrawn from Ukraine and with airlines now actively avoiding the country.”
They continued: “Ukrainian operators face operational disruptions for the loss of insurance coverage due to the potential risk of armed conflict in the region. Budget carrier SkyUp stopped selling tickets for flights from February 14-16 as plane lessors’ demands the planes be moved to the European Union.
In response, Ukraine’s infrastructure ministry reportedly also announced a $590 million fund to ensure aircraft fly through the country’s airspace, amid reports that global insurers were suspending warranties due to the threat of a large-scale Russian attack.
“KLM reacted first and canceled its flight to Ukraine on Saturday morning. SkyUp completed Sunday’s international flight Funchal-Kyiv in Kishinev and transported passengers to Kyiv by bus. Since February 14, 2022, Ukrainian airlines have had to stop operating charter aircraft insured abroad.
For this, he wrote, that the Ministry of Infrastructure of Ukraine announced its funds to insure aircraft, although he cites slightly different figures from
above.Cyber will be one of the areas of the insurance industry that will be under scrutiny, as cyber warfare is expected to coincide with the invasion. Australian insurer Honan said that many cyber policies contain the same exceptions around acts of war that exist in other insurance policies, even if insurers do not apply them to attacks from overseas ‘threat actors’.
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- The shipping industry scrambles to react to the ‘nightmare scenario’
The shipping industry scrambles to figure out how to respond to the Russian invasion of Ukraine, with the Sea of Azov blockaded and Ukrainian ports closed.
Yevgen Lisuchenko, permanent representative of Ukraine’s International Maritime Organization, said Russia had deployed 46 warships in the Black and Azov seas and 17 warships in the Mediterranean, including two missile cruisers and seven more missile ships, including two submarines.
“Today, the situation has deteriorated significantly with the start of Russia’s full-scale military intervention, which is an act of aggression against Ukraine,” he told Lloyd’s List.
Lisuchenko said Russia had closed off areas for shipments under the guise of a “counter-terrorist operation” broadcast by alerts from the Novorossiysk and Taganrog stations.
“This poses a direct threat to maritime safety and security and disrupts international commercial shipping in the Black Sea – Sea of Azov,” he said. “In addition, the propaganda machine of the Russian Federation is trying to disperse disinformation about marine casualties in these areas.
Lloyd’s List Intelligence data shows 116 ships queuing at the south entrance to the Kerch Strait and another 52 ships waiting in the south. At the north to south entrances there were 45 Russian-flagged ships waiting.
George Pitaoulis, marine personnel and director of development at ABC Maritime, a ship guard based in Switzerland, told Lloyd’s List that Odessa had been bombed and his company had moved operations to its Greek office.
Lisuchenko confirmed Odessa was was bombed “indiscriminately” but could not say whether or how many people were killed. The Russians had also opened fire on Mariupol this morning, he said. “They are continuing their attack.”
Pitaoulis said the price of taxis from the center of Odessa to the outskirts of the city had increased from approx. $8 to about $500 when civilians fled away from the city.
There are no flights to Ukraine, Moldova or Belarus, with the only way into the country via Romania, he said.
He said it was possible Russia would launch another attack from the west through its enclave in Moldova.
Danica Crewing managing director Henrik Jensen said transit crews had been stationed in Poland and Istanbul.
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- Russia’s invasion of Ukraine: Insurance implications
As Russia’s invasion of Ukraine continues, the number of civilian casualties increases and the economic impact reverberates around the world. According to the Honan Insurance Group, the conflict could have far-reaching implications for international and Australian businesses, particularly in the cyber insurance space.
“An attack on a Ukrainian IT provider could result in a data breach or failure of critical services for Australian businesses, triggering potential notices to regulators and their impact on consumers,” said Poppy Foxton, Honan’s national head of corporate insurance and risk solutions.
Foxton said more than 100 international companies from the Fortune 500 list are clients of Ukrainian IT firms, including Google, IBM, Amazon, Boeing and Visa.
“From an insurance perspective, most cyber policies contain broad form exclusions from losses resulting from Acts of War, but insurance companies generally do not apply to cyber attacks originating from overseas threat actors,” he said.
Foxton said regardless of whether a business has cyber insurance, all businesses should take action to limit their exposure to cyber risk.
“That includes reviewing IT security protocols and defense networks, ensuring business continuity and disaster recovery plans are in place and establishing a cyber framework with clear pathways to notify all necessary stakeholders of breaches,” he said.
Risk expert Honan said it was also important to review all contracts for any terms of notification of suspected infringement to ensure “readiness to notify as necessary.”
More than a week ago, only the threat of war between Russia and Ukraine caused shares in several Australian companies to plummet. QBE fell nearly 11% after full-year profit missed forecasts. That’s despite solid financial performance for the 12 months to December 31, 2021.
Russia has reportedly used cyber-attacks ahead of a full-scale invasion.
According to Ukrainian authorities, a series of cyber attacks knocked down the websites of the Ukrainian army, defense ministry and major banks. Websites experience a flood of junk data packets which makes them unreachable.
In a news release, Honan said this digital attack is called a “wiper” attack and destroys all data on infected machines. The attack was designed to knock websites offline by flooding them with requests until they crash.
The same Honan release details Australia’s “strong trade relationship with Ukraine” as Ukraine’s leading economic partner in the Oceania region.
“In Australia, we imported more than $40 million, mainly in edible oils, metallurgy, fertilizers, machinery and ships from Ukraine and exported about $110 million, including medicine, machinery, optics, jewelry, cardboard and paper, ‘ said the release.
Both Australian and Ukrainian companies are also linked with logistics and telecommunications operations, the release said.
“In addition, Australia has significant investments in Ukraine, totaling nearly $700,000 by 2021. The lion’s share of funding is invested into retail trade, information technology and telecommunications, so disruption to these areas could have a major impact on Australian businesses. ,” added the release.
According to Reuters, earlier this month, the London marine insurance market added Ukrainian and Russian waters around the Black and Sea of Azov to its list of high-risk areas.
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