Reuters: London According to industry insiders, insurance rates are growing for several aviation and maritime businesses that are particularly vulnerable to the conflict in Ukraine and are driving up expenses for airline and shipping companies.
According to insurance broker Marsh, the battle was pushing up prices globally for business insurance, which increased 11% on average in the first quarter.
The aggregate data only includes the first five weeks after the invasion and hides sharper movements in particular areas.
In general, standard insurance policies do not cover war. Customers add more war insurance on top.
Aviation war insurance was no longer accessible for Ukraine, Russia, and Belarus as a result of the fighting, according to Garrett Hanrahan, global head of aviation at Marsh.
As insurers attempt to recuperate some of their losses, he added, aircraft war cover has increased for the rest of the world.
“Through rate increases, the hull war market is starting to reflate itself.”
According to a research by S&P Global, the fight, which Russia refers to as a “special military operation,” may result in insurance losses of $16 billion to $35 billion in so-called “specialty” insurance classes including aviation, maritime, trade credit, political risk, and cyber.
According to S&P Global, aviation insurance claims related to the hundreds of leased planes stuck in Russia as a result of western sanctions and Russian retaliatory measures might amount $15 billion.
A recent hike in insurance rates was called “not a pretty sight” by one lessor of aircraft.
One underwriter said that some aircraft lessors—a particularly vulnerable segment of the market since their aircraft are grounded in Russia—were now required to pay 10 times their initial premium, while another claimed that insurers may “name their price” to lessors.
In ship insurance, when a ship enters extremely hazardous seas, regions that are updated by the Lloyd’s market, policyholders must pay an extra “breach” premium.
According to three insurance sources, this has multiplied for the region around Russian and Ukrainian seas in the Black Sea and Sea of Avov, rising from 0.025% before the invasion to about 5% of the ship’s worth, or millions of dollars for a seven-day coverage.
A ship must pay the additional fee each time it enters certain seas.
Following the Lloyd’s market’s classification of all Russian ports as high risk, rates for ships entering other Russian waterways have also increased by at least 50%, according to two of the sources.
Some maritime insurers have also ceased offering coverage for the area due to the risks.
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