How data and technology will power insurers' Ukraine rebuilding efforts

How data and technology will power insurers’ Ukraine rebuilding efforts | Insurance Business America

Technology

How data and technology will power insurers’ Ukraine rebuilding efforts

Insurance will be instrumental to the work

Though its war with Russia is far from over, Ukraine faces another battle: rebuilding its conflict-torn economy.

Nearly 500 global companies from a wide swath of industry pledged their support to the rebuilding effort at the Ukraine Recovery Conference in London last month.

Future investments and infrastructure will be almost impossible to deliver without insurance, and without the right data, it will be extremely challenging for insurers to underwrite the risks involved, according to one insurtech leader.

Mark Costin (pictured top), commercial director at the London-based Insurwave, explained that data will likely drive the insurance industry’s efforts to support private investments in Ukraine.

“Governments will have to lean on the private sector to provide the infrastructure because they simply don’t have the juice to do it themselves. At that point, they will probably initially indemnify the private sector,” Costin said.

“But as the process moves forward, I can see a situation where governments will push the risk from the treasury back towards the private sector, because they will not want to retain risk. The invitation will be to the private contractors to acquire insurance.

“So, I think the solution will be found in the insurance sector. At that point, insurers are going to need to know what the risk is and what the assets are that they’re insuring, where the assets are, what the value is, and what the aggregation is in certain locations. That can only be achieved if the data is collected digitally and housed in a way that is completely visible to the insurers and the financiers.”

Private sector and insurance key to Ukraine’s recovery

According to the World Bank, the cost of rebuilding Ukraine over the next decade is pegged at over $400 billion. The figure is expected to rise as the war drags on.

Ukraine’s partners have agreed to provide a further $60 billion to meet the country’s recovery and reconstruction needs, according to UK government. The US announced $1.3 billion in additional aid to Ukraine, including $675 million to modernize Ukraine’s critical infrastructure.

Risk pricing to cover those reconstruction projects would require tremendous amounts of data, according to Costin.

Insurwave, for its part, has some expertise in war-related risks. It said its platform for complex commercial lines insurance helped enable the Black Sea Grain Deal that facilitated the export of much-need grain exports from Ukrainian ports last year.

Ascot Underwriting, a Lloyd’s syndicate and global specialty insurance underwriter, provided coverage for grain and food products under the treaty. As Ascot’s technology partner, Insurwave said it helped increase the speed of covering the risk through real-time tracking data on its platform.

“We provided the services around the mapping of assets to a facility that was led by Ascot and brokered by Marsh,” said Costin. “We enabled all parties to track the vessels in the Black Sea, so they were completely aware of the exposures, and more importantly, the aggregation of those exposures.”

“As Russia continues to destroy, we are here to help Ukraine rebuild — rebuild lives, rebuild its country, rebuild its future,” – @SecBlinken during the Ukraine Recovery Conference. Read about how countries and others are supporting Ukraine’s recovery: https://t.co/JmtM41K4J2.

— Department of State (@StateDept) July 9, 2023

‘Data needs to be a living thing’

Insurance firms that contribute to the Ukraine recovery effort will likewise need powerful data and analytics capabilities to track risks. Costin said the insurance industry will need to be more agile to adapt the technologies needed to provide coverage.

“In the conventional insurance market, you tend to place a risk in the market, and the day it incepts is when the information is at its most accurate,” he said. “Over the next 364 days, it becomes less accurate, to the point that it becomes completely inaccurate at the point of expiry.

“I don’t think a $400-billion rebuilding project is going to be able to sustain that. Any measurement of risk and data is going to have to be a living thing. Insurers will need to understand, almost on a daily basis, what the exposure is. That can’t be achieved in the conventional way. It’s going to have to be done by tech.”

Around the Ukraine Recovery Conference, insurance giants Aon and Lloyd’s unveiled a collaboration with Vienna Insurance Group (VIG) to deliver fast-track access to enhanced reinsurance capacity to support domestic and international companies operating in Ukraine with manufacturing and construction risk exposure, excluding war cover.

Ukraine faces an uphill battle to raise investments, a battle it can’t win without help from the insurance industry. Data will be critical to providing insurers with more confidence to cover the risks of the rebuilding effort, Costin stressed.

“The ability to manage data and give much greater visibility [of the risks] to insurers will help them be more willing to commit capacity. It will make investment more likely because investors will take comfort from the fact that there is a process in place,” he said.

“And the governments, who I suspect will have to provide indemnity during the initial phase, will be able to step back and allow the private sector to become engaged, which will speed up the process.”

What are your thoughts on this story? Share them in the comments below.