Ukrainian, Russian Insurance for Ships and Planes Are on High Risk, Industry Sources Say

One of the major concerns for insurance companies is how to cover the insurance of Ukrainian and Russian planes and ships, which has become riskier due to the unabated conflict.

Insurers Will No Longer Cover Ukraine, Russia Planes and Ships

Insurers could decline to cover aircraft coming to Ukraine or vessels setting sail through the Black Sea as reinsurers, which assures the insurers that the region will be excluded from policy initiatives as of next month, four industry analysts said, report Zawya.

Reinsurers generally restore their 12-month agreements with insurance clients on Jan. 1, which means they have their first possibility to tone down visibility because the war in Donbas started, after already being clobbered this year by losses related to the disagreement as well as from Hurricane Ian in Florida, noted Reuters.

One example is a proposed contract clause under circulation about claims connected to the war for aviation and maritime vehicles in use in Kyiv, Belarus, and Russia, as explained. If there is no support from the reinsurers, the insurer might not be able to provide the coverage needed for the region.

One of the critical concerns of these reinsurers is the loss of planes that are the property of leasing companies who deal with aircraft they own, especially with Ukraine and Russian insurance.

Since the start of the conflict, actual aircraft left in Russia now encumbers with about $8 billion in legal claims, citing Pipa News.

Reinsurers To Exclude War-Related Claims

David Smith, the chief head of hull and marine liabilities at broker McGill and Partners, asserted that claims inside one area cause reinsurers to be cautious of the overall war implications, even though marine and aviation war general liability performs on an "aggregation" basis, contributing to the losses as just one. He added that it does not matter whether it's a plane or ship because it gets lumped in the aggregation.

While substantial reinsurers Hannover Re, Munich Re, and Swiss Re refused to respond, Chris McGill, boss of cargo at insurer Ascot, has said that the concern stretches to everything in the industry. Approximately 90% of the war risk industry for maritime and aerospace has been covered by insurance in Lloyd's and the wider London commercial insurance business, as indicated by the references.

Based on the sources that remarked on the talks concerning insurers and reinsurers that will be covering contracts in 2023, has concerns about how to frame the contracts as the worst is coming.

McGill from Ascot commented that it is a tough line from the reinsurance sector. The leading cargo insurance company Ascot guarantees the importation of grains from Kyiv.

Aviation insurance firms have been reeling from claims related to these two Boeing 737 MAX crashes in 2018 and 2019, whereas more than 400 leased planes valued at around $10 billion are still unable to depart Russia ever since Western sanctions compelled the cessation of their rental agreements.

Due to the unexpected turn of events, aviation insurance is reducing the coverage for occurrences like seizing planes before they can be used. More problems concerning war are getting stuck in ports or China assaulting Taiwan.

Companies covering Ukraine and Russian insurance are wary as the conflict makes coverage harder due to sanctions and the war.