Fiedler calls for withdrawal of blanket exclusions to back Ukraine reconstruction

German risk and insurance managers have called on the insurance and reinsurance market, potentially with state support, to reconsider its tough line on the provision of insurance capacity to support the reconstruction in Ukraine. Following the invasion of Ukraine by Russia, the international reinsurance and insurance market withdrew capacity and applied blanket exclusions, apart from minor exceptions such as the Lloyd’s initiative to support Black Sea grain exports. The domestic Ukrainian insurance sector continues to operate, generating about €1.2bn of premiums, but cannot provide what is needed to help the reconstruction effort without the support of international carriers. During his opening speech at this year’s GVNW Symposium in Munich, the association’s new president Patrick Fiedler drew spontaneous applause from the massed ranks of German insurance managers and wider industry, when he called on the market to rethink its blanket exclusion approach to Ukraine. “Most industrial insurers have excluded Ukraine and Belarus risks. Why? What else legally is required other what is done through sanctions clauses? From our perspective – nothing,” said Fiedler, who is senior vice president of insurance at chemicals giant BASF. “These exclusions are seen as downright unfair. Those who are trying to invest in Ukraine are not receiving the support they need. The domestic insurance market is still surviving and writing about €1.2bn in premiums but it cannot provide the cover needed by investors because the international insurers and reinsurers have withdrawn,” he added. Fiedler pointed to recent efforts made in the London market to try to generate renewed support for Ukrainian risks that he described as positive, clearly suggesting that the big German and wider European insurers need to play their part. In June, Aon and Lloyd’s announced they had committed to facilitating foreign (re)insurance capacity together with Vienna Insurance Group (VIG) to bolster Ukraine’s economic resilience and support the country’s recovery and reconstruction. As part of the UK-Ukraine Private Finance Partnership, Lloyd’s and Aon committed to deliver fast-track access to supplementary foreign (re)insurance capacity to support both international and domestic companies operating in Ukraine with manufacturing and construction risk exposure, excluding war cover. As a first step, Aon and Lloyd’s joined forces with VIG, one of the largest insurers operating in Ukraine, to provide both treaty and facultative reinsurance that will allow increased capacity for their local and international clients requiring cover for manufacturing and construction activities. Shortly after this announcement, as political leaders and G7 finance ministers met in London for the Ukraine Recovery Conference (URC), Marsh proposed the creation of a major “war risk pool” to insure the vast reconstruction work in Ukraine, which it is estimated could cost up to $1trn. The two-day event was hosted by British Prime Minister Rishi Sunak. This suggests that the UK government at least would back Marsh’s proposal to create a multinational public-private partnership centred around a war risk pool such as Pool Re in the UK or GAREAT in France. “I positively viewed the London Ukraine recovery conference and Marsh’s plan for a multinational state-backed pool, along with the efforts made by Aon and Lloyd’s to arrange more capacity. Prime Minster Sunak suggested a state-backed pool for war risks like Pool Re, which has to be positive,” said Fielder. The GVNW chairman clearly has the backing of the wider association membership. Whether the big German and international reinsurers will add their backing with fresh capacity and relaxation of the blanket exclusions remains to be seen.

Fiedler calls for withdrawal of blanket exclusions to back Ukraine reconstruction

Wider market needs to follow London’s lead

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