(Reuters) – American Worldwide Team Inc., among the world’s largest industrial insurance providers, is considering reducing coverage for Russia and Ukraine, to protect itself from significant claims risk as permits increase and fighting continues, insurance brokers and other sources knowing this problem said.
AIG is considering introducing exemption provisions to the plan for companies operating in the region through various plans, with both resources to be determined.
Other important insurance providers also want to eliminate Russia, Ukraine and Belarus from plans, the source said, naming several insurance providers and policyholders.
Reuters was unable to determine whether potential reductions in coverage would be used across AIG’s plans in these countries. The insurance provider declined to comment.
“What we’re seeing now is the underwriters are starting to bring Russia, the Ukraine that comes straight into their plans,” said Meredith Schnur, managing supervisor, lead US and Canadian cyber broker at insurance broker Marsh, who declined to name the insurer. .
Brokers like Marsh serve as intermediaries between corporate customers and insurance providers, and are sometimes associated with setting up plans.
If AIG reduces coverage for companies and companies operating in Russia and Ukraine, it will surely be the first significant insurance provider to do so, perhaps leading the way for others to do the same.
While Russia has become a restricted area for many companies due to permits imposed following Moscow’s intrusion into Ukraine, several multinationals continue to work there as well as in Ukraine in industries ranging from agriculture to power generation. They need insurance to keep their company open.
Local companies also depend on insurance for damage to products, structures and vehicles and for worker injury or death. Reuters was unable to determine how much of AIG’s business in Russia and Ukraine is concentrated in housing companies.
AIG, which recorded overall insurance costs totaling over $26 billion in 2015, has procedures in Russia, according to its website, and is a significant global player in industries such as electricity, buildings and cyberspace.
Permits in Russia currently require insurance providers to withdraw from limited coverage of Russian entities and persons, while UK and European permits for air travel insurance extend their respective pasts to all Russian companies.
Insurance brokers such as Aon PLC and Willis Towers Watson PLC have cold procedures in Russia, while reinsurers Munich Re and Swiss Re are among the companies that have said they will not write new business in the country, whether potential policyholders are approved or otherwise.
But AIG and various other underwriters are looking to go further, including proper wording into insurance coverage to remove coverage for Ukraine, Belarus and Russian and Ukrainian procedures from Western companies, the industry resource said.
Insurance providers are concerned about reputational damage working in Russia and they are also emphasizing property damage and pending resettlement in Ukraine, where the economic climate is ravaged by fighting.
Some current policyholders have difficulty finding insurance.
François Malan, head of risk and conformity police at French design firm Eiffage, said recently that he was forced to agree to an insurance exemption for transferring goods in waters near Ukraine.
“It’s non-negotiable, it’s not a price issue – it’s not covered,” he said.
Ships sailing directly into the waters around the Black and Sea of Azov, which include the coast of Ukraine, need to have additional battle risk insurance, which means paying a different premium.
Some insurers are also reducing arrangements for this type of insurance because of widespread hazards, including being hit by projectiles or drifting mines, aquatic insurance resources say.
The pandemic manual
Insurance providers usually include certain types of exclusions in plans that have the potential to create disputes, such as throughout the South Korean winter Olympics, but usually do not eliminate all areas, as when it comes to the Ukraine dilemma.
The move to eliminate the risky location of their business reflects the behavior of insurance companies after the COVID-19 pandemic.
Faced with losses estimated at $100 billion, insurers are rushing to eliminate COVID-19 first and after that all pandemics from plans.
After also charging premium prices, many of them reported solid earnings in 2021, the second year of the pandemic. Several industry resources said losses were smaller than previously anticipated as a result of the activity.
S&P Global recently estimated that industrial insurers’ losses from the Russia-Ukraine dispute could total $35 billion.
S&P said the insurance industries most likely to be impacted were air travel, professional credit, political risks such as nationalization, cyberspace, physical political violence and water battles.
Swiss Re said on Thursday that insurance and reinsurance losses from intrusions were most likely to be found in areas such as moderate-sized natural disaster losses such as from typhoons.