Ukraine, Russia plane and ship insurance at risk from Jan 1 -sources

Insurers may refuse to cover planes flying to Ukraine or ships sailing through the Black Sea as reinsurers - who insure the insurers - propose excluding the region from policies from next month, four industry sources said. Reinsurers typically renew their 12-month contracts with insurance clients on Jan. 1, meaning they have the first opportunity to scale back exposure since the war in Ukraine started, after being hit this year by losses related to the conflict and from Hurricane Ian in Florida. A proposed contract clause being circulated by reinsurers excludes war-related claims for planes or ships in Ukraine, Belarus and Russia, the four sources told Reuters. Without the backing of the reinsurers, insurers themselves may be unwilling to provide cover for the region, they added. Reinsurers are particularly concerned about the loss of planes owned by aircraft leasing companies which are stuck in Russia and have already generated $8b in legal claims. As they operate on an “aggregation” basis with marine and aviation war risk insurance, totting up the losses as one, claims in one area make reinsurers wary about the whole war risk sector, David Smith, head of hull and marine liabilities at broker McGill and Partners said. “They don’t care if it’s a ship or a plane, it’s all dragged along in the aggregation.” While major reinsurers Hannover Re, Munich Re and Swiss Re declined to comment, Chris McGill, head of cargo at insurer Ascot, said the issue extends to the whole sector. Around 90% of the war risk market for marine and aviation is insured in Lloyd’s and the wider London commercial insurance market, the sources noted.<br/>