Insurers can play a key role as institutions impose sanctions in the wake of Russia’s invasion of Ukraine. However, as Liz Booth reports, insurers are not just withdrawing cover, they are also actively supporting communities disrupted by war
Ukraine has urged regulators of European nations to help insurers and other financial services providers to exit Russia and Belarus.
The National Bank of Ukraine has urged the non-bank financial market regulators of Austria, Bulgaria and Latvia, among other European insurance regulators, to make it easier for insurers to exit in a safe and orderly way.
The bank said the move seeks to reduce the reputational risk of Ukrainian insurers and other entities that are part of international insurance and financial groups. It will also act as a means to further isolate Russia and Belarus internationally.
The recent move is just one of many such activities among insurance entities across the world in the wake of the invasion. Marine and aviation insurers were among the first to be impacted as airlines were banned from airspace – Russian in Europe, European in Russia.
Marine insurers were also directly impacted as Ukrainian ports were bombarded by shelling. At the time of The Journal going to press, some 96 ships remain stuck in Ukrainian ports, often with their crews expatriated. Not only do these vessels face harm from the Russian navy, but should they set sail, a minefield has been laid through Ukrainian waters making it impossible for civilian vessels to transit.
Added to that, Russia’s President Vladimir Putin has linked the lifting of the ports siege with the lifting of sanctions against Russia – a true chicken-and-egg situation.
The millions of tons of Ukrainian grain usually exported by ship is now making its way slowly out of the country via road and rail, meaning far less is being exported and sparking fears of food shortages globally – with the possibility of civil unrest and the risk that insurers will face many more claims under political, violence and terrorism covers.
But this story is not just one of insurers facing much larger payouts. It is also a good news story, as some insurers are going out of their way on humanitarian levels to support the displaced – both those from Ukraine and those from further afield who have been caught up in the conflict.
Insurers are going out of their way on humanitarian levels to support the displaced – both those from Ukraine and those from further afield who have been caught up in the conflict
Oliver Bäte, chairman of the board of management at Allianz, says: “From the outset, we have focused on the physical and psychological safety of our employees. I am pleased to share that all of our employees in the affected region are safe and our support for them and their families is ongoing.
“Allianz’s humanitarian response currently focuses on emergency support as well as the immediate and near-term needs of refugees, particularly those of children. Our philanthropic efforts are complemented by a range of activities and donations led by our employees. Their empathy and creativity is on display in myriad expressions of support designed to lessen the anguish of conflict: aid convoys, the collection of clothing and medicines, the accommodation of refugees in their own homes and, last but not least, financial donations of extraordinary personal generosity.”
As a company, he says, Allianz is not conducting new business in Russia. No new investment has been made in Russia or Belarus on behalf of policyholders since before the invasion and its insurance businesses are decisively reducing exposure.
This combined business and personal approach is echoed across the profession.
The Association of British Insurers (ABI) has pages of help on its website for those in the UK who are offering their houses to refugees or driving trucks across Europe to deliver aid.
An example of how a policy will work in such situations comes from LV=. It explains that any Ukrainian guest’s belongings will automatically be covered by the host’s home content policy.
Loss or damage to the home or belongings (under a buildings or contents policy) by insured events such as fire, escape of water or theft, will also be covered – even if one of the guests is responsible.
Under a home contents policy, the policyholders are covered against a public liability claim if a guest is injured and they are found to be responsible; and if policyholders have added home legal expenses cover to their policy, their guest(s) will have use of the LV= legal advice line, too.
The ABI guide on insurance and Ukraine outlines guidance regarding housing refugees, stating that the insurance and long-term savings profession supports homeowners providing assistance to those displaced by the Russian invasion of Ukraine, including under the government’s Homes for Ukraine scheme, as well as refugees displaced by any other conflict in the world.
The guide says the following position applies, regardless of where the conflict has taken place:
- If you are a homeowner in the UK and want to temporarily house refugees who have been displaced by conflict as non-paying guests in your home, you do not need to inform your insurer and your cover will remain the same. This applies for the first 12 months of any refugees living with you, including when your policy is due for renewal. After 12 months, if any refugees are still living with you, then you should tell your insurer when you next renew your policy.
- Customers should be aware of any existing terms that might apply to non-paying guests within their insurance policy and contact their insurer if they wish to discuss their cover or other changes in circumstances. Some insurers have committed to extending cover to include refugees as members of a household.
- If homeowners wish to house refugees in their second homes, guest homes or rental properties, or for longer than 12 months at their primary residence, they should discuss this with their insurer in the first instance.
- Customers should visit the website of their insurer and, if necessary, contact them for further information.
The CII stands united with the people of Ukraine, who are facing violence, upheaval and the trauma of war
Hannah Gurga, director general of the ABI, says: “We stand united with the people of Ukraine in the face of the Russian invasion and our thoughts are with them and their families.
“Our members fully support sanctions imposed by the UK government and are committed to enforcing their implementation. We are engaging regularly with the government and the Financial Conduct Authority as the disturbing events unfold. We are also discussing with Lloyd's and Insurance Europe (the European insurance and reinsurance federation), the direct and indirect impact of the events in Ukraine on the insurance and long-term savings industry, as well as exploring and sharing ideas on how we can support Ukrainian citizens in this humanitarian disaster.”
In April, the CII launched a Ukraine Hub to support professionals advising clients on the impact of the Russian invasion of Ukraine, providing updates on sanctions, political risks and cyber incidents.
The CII also suspended operations relating to Russia, continuing to comply with sanctions imposed by the UK government and others.
Jonathan Clark, interim CEO of the CII, says: “The CII stands united with the people of Ukraine, who are facing violence, upheaval and the trauma of war.
“We are committed to delivering learning, insight and good practice guidance to help professionals explain how the Russian invasion of Ukraine will impact their customers and clients, and explore ways to mitigate cyber and political risk.
“This support can be found on our website, along with information about ways the profession can ensure critical humanitarian assistance is available to those who need it in the Ukraine.”
Liz Booth is contributing editor of The Journal
Image credit | Shutterstock
ABI Guidance on motor policies
Volunteer driving in the UK
- Most customers will not need to inform their insurer and their cover will not be impacted, in accordance with the ABI Volunteer Driving Commitments.
Private vehicles used for humanitarian aid in the European Economic Area
- A UK motor insurance policy will provide, at minimum, third-party liability coverage for a period specified in the policy when driving within the ‘Free Circulation without Green Card’ zone.
- We encourage you to familiarise yourself with regulations around the cross-border transport of goods and abide by any travel advice issued by the Foreign, Commonwealth & Development Office.
Commercial vehicles used for humanitarian aid in the European Economic Area
- Customers with commercial vehicles that have comprehensive motor insurance cover in the UK will be granted comprehensive coverage at no additional charge for any cross-border journeys taken for humanitarian reasons within the ‘Free Circulation without Green Card’ zone for the next three months, until 11 June 2022, at which point it will be reviewed.
- Policyholders that are planning to undertake cross-border journeys and who would usually not be covered for these journeys under their existing comprehensive policy, should inform their insurer of their plans.