By Michel Leonard, PhD, CBE, vice president, senior economist and computer scientist, head of Triple-I̵7;s finance and analysis department
Ukraine is one of the largest countries with insured risks for political risk insurance (PRI) and Trade Credit Insurance (TCI). This is before the current situation in Ukraine and began immediately after the country’s accession to sovereignty.
In Ukraine, PRI and TCI are mainly bought by foreign companies with cross-border trade or investments in the extraction and manufacturing sectors. New PRI losses in Ukraine due to Russia’s invasion are likely to be significant but well within the ability of private carriers to meet their obligations. In fact, several factors, including operators ‘reserves against future losses in Ukraine and the important role of state and multilateral agencies in providing PRI and TCI coverage, have contributed to significantly reducing private operators’ outstanding exposures to Ukraine and Russian risks. .
Losses due to Russia’s invasion of Ukraine would fall under extensive political violence and, more specifically, during wars and civil wars and strikes, riots and rebellions. PRI coverage primarily protects against loss of assets or profit, while TCI’s credit coverage primarily protects against loss of profit due to force majeure. Depending on the coverage conditions, PRI and TCI cover non-profits due to sanctions.
The majority of private carriers that provide PRI insurance are based in the US, at Lloyd’s and at Bermuda.
The biggest risk associated with Russia’s attack on Ukraine for business in the United States and is Russian cyber attacks regardless of whether they have operations, investments or do not do business in Ukraine. A PRI policy is not necessary to cover Russian cyberattacks against US companies in the United States.