The global insurance industry could be facing billions of dollars in losses as a result of Russia’s invasion of Ukraine, warns stakeholders.
A Financial Times source said insurance marketplace Lloyd’s is potentially looking at overall losses worth somewhere between US$1 billion and US$4 billion. The estimate already excludes payouts from reinsurers.
Lloyd’s declined to comment, according to the publication.
Earlier this week, the centuries-old exchange stated: “For Lloyd’s – despite our market having representatives all over the world – our activities in Russia and Belarus represent less than 1% of the business we transact. However, we know the world is too connected for any of us to sit on the sidelines. And insurance is too ingrained in the world economy for us to not play an active role.
“So, we’ll keep deploying our expertise, resources and networks – covering crucial areas like cyber, space, and political risk – to help deliver an effective sanctions regime against Russian assets.”
“We’ll continue the frequent conversations we’ve been having with UK and international regulators since the conflict began,” it added, “ensuring we stay lockstep with these bodies as they give careful thought to how sanctions can deal maximum impact.”
Meanwhile, Marsh global aviation head Garrett Hanrahan believes that failure to recover stranded planes could mean a US$5 billion insurance hit in what could be history’s single biggest aviation loss. If the war escalates further, a public-private solution to address the losses might have to be explored, he suggested.
“The ripple effects from this terrible situation will be felt widely,” the Financial Times quoted London Market Group chief executive Caroline Wagstaff as saying. “Insurance claims – possibly significant across the market – will be made, and the market is working to understand their scope and scale.”