Insurers around the world have stopped issuing certain types of insurance to companies with branches or trading partners in Russia. As the Wall Street Journal reports, the service providers are reacting to the harsh sanctions against Russia. Also risks for the Russian economy, due to which Russian companies may be unable to fulfill contracts.
Specifically, it is about insurance against political risks (PRI). Such insurance covers losses resulting from war, expropriation or forced sales of assets. But trade credit insurance was also cut, according to the report. These insurance companies pay when trading partners do not pay for company goods and services.
The Wall Street Journal, citing an executive of a shipping company, writes that it is currently nearly impossible to get insurance to enter ports in Ukraine’s Black Sea. Because: The closer the outbreak of war came in the past few weeks, the more expensive such insurance apparently became.
Meanwhile, according to the Reinsurance News portal, analysts from the Peel Hunt investment bank assess the current situation as follows: “We know anecdotally that the total insurance limit for PRI insurance in Ukraine and Russia is around USD 2.0 billion (a very rough estimate). Therefore, while the risk appears manageable, even a single digit percentage would be a significant loss for the market.”
In addition to PRIs, commercial credit insurance and others, the topic of cyber security will also play a major role for insurers. At the latest when Russian ground troops invaded Ukraine, the invasion of hackers in Russian cyberspace began. A cyberwar has long since flared up. Reinsurance News quotes Australian insurer Honan as saying that “many cyber policies contain the same war exclusions as other insurance policies.”