A Ukrainian risk manager told Commercial Risk’s latest event that now is the moment for insurance to prove its worth and help his country in its hour of need.
Speaking at our global programmes conference, Mykhailo Rushkovskyi, risk manager at DTEK and founder of RUNDERC.com, also believes business needs to urgently review its approach to risk and insurance management following his country’s invasion by Russia, in order to deal with future systemic shocks.
He urged insurers to step up and help insureds in the Ukraine, as well as others around world affected by the war, to bounce back from the ongoing crisis.
“Now we are in the moment where insurance must show its value and its support for business and the recovery. This is the challenge not only for Ukraine but also the global market because we have a lot of joint projects, infrastructure and logistics, and it is all interrelated. We are all linked to each other,” said Rushkovskyi.
He likened insurance to a parachute that can seem unnecessary when on the ground but is clearly needed once you jump out of the plane. Ukrainian companies are now at that point when they need the parachute to open.
Rushkovskyi said the big lesson from the war in Ukraine is that the world of risk management and insurance cannot carry on doing things as it did before the crisis.
“My crystal risk management ball says this is not the last systemic shock we will face. For example, we haven’t yet had the big cyber crisis, we haven’t had the big logistic crisis… so we urgently need to review our risk management systems and upgrade them,” he said.
Rushkovskyi added that insurance will need play an important role in building this stronger resilience and buyers need more bespoke solutions.
“We can’t use one-size-fits-all solutions. This will not work,” he said, before urging all parties in the risk transfer chain to come around the table and develop better cover.
“We need to talk,” said Rushkovskyi. “This should involve all parties, the risk managers, the insurers and brokers. We should all sit together and find solutions for specific risks, not one size fits all,” he added.
As well as pushing insurers to deliver on their promises and develop better risk transfer solutions, Rushkovskyi urged them think about the costs and value of the product they sell to corporates.
Expecting inflation to drive market hardening again in Europe this year, he suggested companies may become less inclined to buy increasingly expensive cover that, in some cases, has yet to prove its worth.
“Risk managers are coming to the board and saying ‘ok we have this insurance that may or may not work, and today it costs twice as much as it used to’. Put yourself in the shoes of the top management. Are they willing buy that insurance? Do they have trust in the insurance coverage? This is an open question to think about,” said the Ukrainian insurance buyer.
He went on to warn that the war in Ukraine could impact risks on other countries. For example, he said some countries are heavily dependent on agricultural exports from Ukraine that may struggle to deliver.
“There is a huge amount exported in the third quarter of this year. It is usually exported through the largest sea ports of Ukraine in the south but now we have only two ports for these operations. And we have Russian military ships in the Black Sea. So, this is the challenge to deliver these goods to other countries,” he said.
“So there could be social unrest in these countries… that could trigger another political crisis in different regions around the world. The ripple effect is really, really significant,” he added.
Commercial Risk’s ‘Managing global programmes in a changing world’ conference is being held on 15-16 June in London and online. You can access the coverage here: www.commercialriskonline.com/events/global-programmes-2022
AIG, Zurich, AXA XL and Marsh are partnering the event, along with AXCO, ChainThat, Generali Global Corporate & Commercial, Globex, QBE, Sompo International, Swiss Re Corporate Solutions, TMF and WTW.