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ID Comment: Ukraine attack poses questions for insurers

Wide range of insurance interests will be watching events closely

As news continues to flood in of Russian air raids on towns, cities, ports and airports across Ukraine, along with ground assaults by infantry and tanks, it would be safe to say the global insurance industry is watching matters carefully.

Ukraine has closed its airspace to civilian overflights, resulting in airlines having to divert around the country. In addition, the Sea of Azov has been closed to shipping and there are reports of neutral vessels being attacked in the port of Odessa.

An initial range of sanctions has been announced by the UK, the US and the EU, but as Insurance Day went to press a second, larger and more sweeping set of sanctions was being discussed that will target Russian banks, financial institutions and political figures, the exact details of which have yet to be announced.

The potential implications for insurance are myriad and will be the topic of careful discussions everywhere from Lloyd’s to all around the globe.

Aviation insurers will doubtless have in mind the tragic shooting down of Malaysian Airlines Flight MH17, which was shot down by mistake in 2014, probably by Russian separatists. Flight data websites show flights are staying well clear of Ukraine now to try to avoid any repeat of that event.

Oil and gas insurers will also be watching events closely. Russia is a major supplier of both fuels to Europe and the world and any sanctions that directly target those two products will have a major impact. The Nord Stream 2 pipeline is already one casualty of Russia’s war in Ukraine after the German government refused to certify it, the impact of which is yet to be ascertained.

Shipping insurers and other interests will also be watching matters carefully. There have been reports of Russian warships in the Black Sea, a body of water used by multiple nations other than Russia and Ukraine. One unconfirmed report said a Turkish vessel has been damaged by a Russian attack on Odessa.

And domestic insurers that cover Ukraine will now be beyond alarmed at the widespread reports of towns and cities being shelled, with the true cost to human life and property remaining unknown.

The size and scale of the Russian invasion remains uncertain, as does the final objective. Will this be a limited war or a full invasion? It is too soon to tell.

However, as news comes in of buildings being damaged or destroyed and lives lost in what is the biggest war in Europe since 1945, it is obvious the damage bill will be a large one, the insurance aspects of which are uncertain.

Much remains unknown, as the situation develops. It would be no exaggeration to say it is fervently hoped by most of the world this crisis is a short one.

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