Invasion of Ukraine: The Impact on Insurance

The Russian invasion of Ukraine will have an impact on insurance processes and renewals and the events of the last few weeks have immediate repercussions on certain lines of coverage.  On March 15th we hosted a thirty-minute webinar to discuss these issues in more detail.

Impact on Marine Cargo and Property

Marine Cargo is one of the most impacted lines of coverage from the events in Russia and Ukraine. These policies do not cover damage or expense arising from war, insurrection, or any hostile act by or against a threatening power.

We have been notified that some Cargo insurance carriers have invoked their right to issue a Notice of Cancelation (NOC) specific to War, Strikes, Riots, and Civil Commotion (SRCC) risks in, to, and from Russia, Ukraine, Black Sea, and Sea of Azov within territorial waters. These NOCs are subject to the Notice of Cancelation period which can range from 48 hours to 7 days. Carriers are then reinstating coverage, and putting geographical stipulations in place for war, strikes, riots, and civil commotion going forward.

Thus far, coverage will remain in place for shipments to Russia or Ukraine, excluding War and SRCC, and per the remaining terms and conditions of your policy. If your policy affords coverage for War and SRCC in other geographies, your coverage should not be impacted in those regions.

Several carriers are taking a more client-centric approach and asking for information related to shipments to and from Belarus, Ukraine, Russia, or anywhere around the Black Sea. Subject to satisfactory review, an exclusionary endorsement may not be necessary.

We anticipate markets will exclude shipments and/or inventory in, to, and from Russia and Ukraine for new and renewal submissions that currently have exposure.

Property policies typically include a war exclusion. Unlike Marine Cargo coverage, Property insurers do not issue an immediate notice of cancelation, but insurance buyers should expect loss, damages and expenses arising from war activities to be excluded.

Cyber Insurance Policies

As we saw with the NotPetya attack in 2017, cyber attacks targeting Ukraine can impact companies far beyond the borders of Ukraine. Cyber insurance policies do contain a war exclusion. However, these policies also have a carveout for cyber terrorism—defined in most insurance policies as a premeditated use of disruptive cyber attacks to further ideological or political objectives. This carveout has allowed many nation-state attacks on private companies to be covered by a cyber insurance policy, including the 2017 NotPetya attack.

But with Russian military forces rolling into Ukraine, the prospect of a carrier invoking the war exclusion to deny cyber-attack claims originating in Russia is heightened. Attribution of any attack suffered by a company buying cyber insurance will be key in determining whether the war exclusion will apply. Best practices for cyber incident response will also prepare a company to handle the fallout from any cyber attack—including one originating in Russia during this war with Ukraine.

Other Coverage

War exclusions exist on many other types of insurance, so contact your Woodruff Sawyer Account Executive to determine where this exclusion may apply. It is important to note that almost all insurance programs are placed on a global basis and insurers are still covering Russia and Ukraine except in situations where the war exclusion may apply. If the war continues for an extended period, insurers may look to exclude coverage in Russia and Ukraine.

Impact on Rates

It is too early to determine what the impact could be on future renewals. We will keep you informed as more information develops.

We will continue to monitor the situation and keep you informed of ongoing changes. If you have any questions, please reach out to your client team.