The Ukraine Invasion and Its Impact on Insurance

Russia’s invasion of the Ukraine has shaken the whole world, and its long-term impact – which is still largely unknown – will resonate accordingly. Beyond the humanitarian impact, estimating the damage, risks assessments and the uncertainty of how the war will unfold calls for insurers and reinsurers to adapt policies, claims and underwriting processes to a new reality.

As the war continues to escalate, the ramifications will be global, impacting vital resources and indices such as energy, oil prices and grain supply, not to mention logistics and shipment of commodities that affect daily life worldwide.

Many European countries depend on Russia for their oil, gas and wheat (Russia is the world’s largest wheat exporter), and with Ukraine being a major corn exporter, particularly to China[1]. Both countries together account for 29% of global wheat exports, 19% of world maize (corn) exports, and 80% of world sunflower oil exports. Keeping inflation low in this climate will be a challenge.

The Five Most Affected Insurance and Reinsurance Areas:

Tourism and Flights – As the war continues and the airspace over Ukraine continues to be fought over, airlines have canceled flights accordingly. Furthermore, all 27 EU nations, as well as Switzerland, Albania, Iceland, Norway and the UK have banned Russian airlines from flying over their airspace. Expedia and announced on March 8 they have stopped selling holiday packages to and from Russia[2], impacting the tourism market as well.

Gas and Oil – Since the invasion, gas prices in the U.S. have increased by 17% in an already inflated market, to the highest rate in 14 years.[3] Although some European countries such as Iceland and UK have greatly developed their renewable energy capacity, most EU countries have a 50% dependency on Russian oil and gas.

Shipping – With oil prices skyrocketing, major ports of both Russia and Ukraine closed, and the airspace off-limits, the shipment of goods for the whole region is greatly affected. Flights are diverted, thus using more fuel for the longer flights, ships are stranded either in port or at sea, and each additional day simply adds to the expense.

Cyber – Cyberattacks are becoming an integral part of modern warfare. Russia reportedly has used some form of cyberattacks in the lead-up to its full-scale invasion. The fact that they are now being perpetrated by governments[4] is testing the boundaries of cyber insurance policies.

Property & Casualty – Obviously P&C is critical not just for the parties directly involved in the conflict but for all organizations that conduct business with those countries. The Russian National Reinsurance Company, a state-owned reinsurance company that was set up in 2016 to provide reinsurance capacity for insurers subject to foreign sanctions, will have to step in and fill in the insurance/reinsurance gap left by foreign reinsurance companies[5].

Efficiency and Agility Are Crucial in Reinsuring a War

One thing that is certain is that inflation caused by current circumstances will impact claims and costs. Insurance spreadsheets will have to be recalculated and re-estimated, and the underwriting process for Russian and Ukrainian risks is a tremendous challenge.

Setting aside the humanitarian impact of such conflicts, almost all other issues related to the conflict will be dealt with from an insurance and reinsurance perspective. This is where compensations happen and where financial and property losses are minimized.

Things to Consider in Light of the Ukraine-Russia War:

  1. Insurance claims and underwriting related to the war are very challenging as there are many lines of insurance involved. Here are some ideas on how to make sense of a truly complex reality: Marine and aviation insurance get a clearer picture on vessel damage than property insurance or reinsurance, which enables them to get started on claims faster. As war does require special policy coverage and is often not a standard clause, chances are that a lot of claims will not be covered. Insurers may need to boost their legal departments to handle the flux of claims stemming from this war – and potentially wind up in court.
  2. Check which insurance policies include Political Risk Insurance (PRI) and war coverage and which don’t. Political Risk Insurance may cover the following potentially relevant scenarios[6]:
    • Physical damage to or destruction of the insured’s property or assets due to acts of war, including lost profits resulting from same.
    • Expropriation or nationalization of the insured’s factories and machinery.
    • Forced divestiture or abandonment of the insured’s property or assets.
    • Selective discrimination by government authorities against the insured’s businesses.
    • Cancellation of permits or licenses needed to operate the insured’s business.
    • Blocking or limiting of the insured’s imports and exports.
    • Seizure or other restrictions on movement of the insured’s foreign currency.
  1. If your business does not have a PRI or war coverage policy, another option is to check for investment treaties. An investment treaty is an international legal treaty between multiple states that protect against property destruction in the event of armed conflict.







  • P&C
  • Property & Casualty
  • property and casualty
  • reinsurance
  • reinsurance complexity
  • reinsurance programs
  • reinsurers
Shay Assaraf

Shay Assaraf Shay Assaraf leads the marketing in Sapiens. Shay brings more than 15 years of B2B and B2C experience from technology and product companies. He has a wealth of expertise in leading end-to-end and fully integrated marketing teams and programs, with a focus on marketing strategy and go-to-market, content and marcom, analyst and public relations, product marketing and lead generation. Originally from Israel, Shay currently lives in London with his wife and three children.