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Home / Insurance / Insurance rates jump for Ukraine war-exposed companies: Sources

Insurance rates jump for Ukraine war-exposed companies: Sources



(Reuters) – Insurance premiums are doubling or more for some airlines and shipping companies that are particularly vulnerable to the war in Ukraine, which increases costs for airlines and shipping companies, say industry sources.

Global commercial insurance premiums rose by an average of 11% during the first quarter, according to insurance broker Marsh, who said the war put upward pressure on interest rates.

But the overall figure hides sharper movements in some sectors and covers only the first five weeks after the invasion.

War is usually excluded from ordinary insurance. Customers buy extra war protection on top.

Garrett Hanrahan, global air traffic controller at Marsh, said air war insurance was no longer available to Ukraine, Russia and Belarus as a result of the conflict.

For the rest of the world, air warfare coverage has doubled as insurance companies try to recoup some of their losses, he said.

“The hull̵

7;s war market is beginning to recover through interest rate hikes,” he said.

The conflict, which Russia calls a “special military operation”, could lead to $ 16 to $ 35 billion in insurance losses in so-called “specialized” insurance classes such as aviation, shipping, trade credits, political risk and cyber, S&P Global said. in a report.

Air insurance claims alone could amount to $ 15 billion, said S&P Global, with hundreds of leased planes stranded in Russia as a result of Western sanctions and Russian countermeasures.

An aircraft rental company described the recent rate hikes on his insurance as “not a pretty sight.”

Some aircraft rental companies – a particularly vulnerable sector of the market because their planes are stuck in Russia – had to pay 10 times their original premium, said one insurer, while another said insurance companies could “mention their price” to lessors.

In ship insurance, policyholders pay an extra “infringement” premium when a ship enters particularly dangerous waters, locations updated by the Lloyd’s market.

For the area around Russian and Ukrainian waters in the Black Sea and the Azov Sea, this has increased several times, said three insurance sources, to about 5% of the ship’s value, from 0.025% before the invasion, and amounted to millions of dollars for a seven-day policy.

Every time a ship enters these waters, it must pay the extra premium.

Prices for ships entering other Russian waters have also risen by at least 50% after the Lloyd’s market classified all Russian ports as high risk, said two sources.

Due to the dangers, some marine insurance companies have also stopped providing coverage for the region.


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