How war in Ukraine may impact business loss claims

Canada’s insurers are in a bit of a holding pattern about how war in Ukraine may drive claims activity among businesses with ties to the region.

Canadian Underwriter contacted numerous insurers and the consensus on any changes to claims and coverage is that ‘time will tell.’

In many ways, the P&C industry’s response to the first month of the war in Ukraine echoes the uncertainty of the early days of the COVID-19 pandemic, noted David Chmiel, senior vice president and national director of claims North America at HUB.

“We’re just unsure, just like we were with COVID the first time. We didn’t know what to expect [in terms of things like] business interruption,” he told CU. “And here we are, two years later, and there’s not been one [COVID] claim accepted, unless it was stated in the policy proposal.”

Chmiel noted HUB has 250 claims consultants throughout the U.S. and Canada, none of whom have yet been contacted about claims. There has been, though, one inquiry from a private equity firm asking if a drop in their stock price would be “covered under a policy saying it was in direct relation to the war and political issues.”

“And obviously, the answer is no,” due to war exclusions in the policy, Chmiel added.

Allianz Global Corporate & Specialty (ACGS ) made similar comments, noting “in general, no coverage can be confirmed for claims caused by war if policies carry war exclusion clauses.”

The company said it would continue to service existing clients in Ukraine as far as possible and that renewals of current Ukrainian business can be considered and will be thoroughly evaluated.

In practice, ACGS noted, the current circumstances could mean completing renewals or providing effective service may be impossible. “All claims related to Ukraine will be evaluated on a case-by-case basis,” the company said.

One month into the war, it’s an open question as to whether or not those claims will actually happen.

“I think maybe as the war dies down, and there’s economic fallout, maybe supply chain issues of things that we would normally get from Russia or Ukraine that can’t get there anymore,” said Chmiel. “That’s a potential. But it’s so early.”

Again, the industry’s response to COVID-19 may be an apt point of comparison, Chmiel said. Finding a carrier that will put COVID-19 in their policies today is virtually impossible, he observed.

“At this time, we do not anticipate coverage for business affected by the war,” he said. “This may change however.”

For its part, ACGS noted the situation in Ukraine means their ability to underwrite and service business for its clients will be limited.

“As we will not be able to guarantee normal service levels in these exceptional circumstances, we are not able to accept new business for Ukraine-based risks,” they said.

Feature image courtesy of iStock.com/Jakub Laichter