Consequences of the Russian-Ukrainian conflict

First and foremost, the contractual provisions of each insurance contract define the exact scope of the coverages and the exclusions.

The definition of the contract’s insurance territory will be decisive. Nevertheless, we can already identify a few trends that will apply to most contracts.

Trend:

The Russian military intervention in Ukraine and the resulting international sanctions have consequences for the insurance market and therefore for your insurance contracts.

The tendency to standardise coverage definitions and add exclusions, observed during the Covid crisis, continues. We must now also expect new contractual developments.

Business interruption

This was already a particular risk during the health crisis, when insurers repeatedly pointed out that business interruption is only insured when it results from material damage and arises from an insured event.

Consequences of the conflict such as supply problems or market losses for an exporter as a result of war are therefore not eligible for compensation.

In the case of unpaid invoices resulting from this conflict, the credit risk insurer will also undoubtedly invoke the war risk exclusion.

Material damage

As a result of the health crisis, inflation had already risen sharply, but the conflict between Russia and Ukraine has pushed the prices of raw materials and goods even higher.

Even when your material damage insurance is linked to the index, these price increases create a risk of serious underinsurance. We note that the prices of certain goods (in stock) have risen by 35 to 50% in less than a year.

Customers who revalue their stocks also effectively observe such price increases in practice. It is therefore certainly worth looking at the value of your stocks and, where necessary, adjusting your insurance contract in the interim.

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A few more examples

Transport insurance

Transport insurance covers material damage to goods entrusted to a professional carrier, regardless of its liability and the limitation thereof.

Insurers offer an optional extension to “War risks”, based in particular on the recommendations of the national organisation of transport insurers, which assesses the danger of geographical areas for the transport of goods.

From 1 March 2022, the classification of areas affected by the conflict between Ukraine and Russia increased, with the result that insuring becomes difficult and that, case by case, the premium increases, sometimes up to ten times the usual premium.

Travel insurance

Professional travel insurance protects business trips with assistance and repatriation as coverage. Here too, war zones are excluded from coverage and the support options from insurers will be very limited.

Economic warfare

The war also has economic consequences. The Central Bank of the Russian Federation has meanwhile prohibited Russian insurers from entering into contracts with insurers, reinsurers or brokers from “hostile countries”, including all countries of the European Union, as well as the United Kingdom, Switzerland, Japan, the United States and many others.

At the same time, European and American insurers have suspended the renewal of international insurance programmes or even announced their withdrawal from the Russian market, making it necessary to place risks with a local insurer. Therefore, particular attention and vigilance are required for the protection of Russian interests of foreign companies.

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