European supervisor hints war exclusions up for clarity review as insurers eye Ukrainian claims

The European insurance supervisory body  EIOPA will press for greater clarity on war exclusions as the continent's insurers face off the possibility of claims against Ukrainian assets.

EIOPA has "enhanced its market monitoring activities" to identify possible consumer risks, EIOPA told Intelligent Insurer when asked of concerns over potential abuse of war exclusions.

"With the situation in Ukraine we intensified contacts with our members and stakeholders to understand issues which they see in the market in relation to lack of clarity about exclusions," EIOPA said in its statement. "We requested numbers to actively monitor the market and share issues they identify to leverage on another’s experience."

Comments come as European insurers have downplayed the risk of claims following the Russian invasion of Ukraine. Q4 earnings calls have not only sought to assure investors that total exposure is low, but have also liberally reminded investors that war exclusions may broadly apply.

Following on work to date over fuzzy exclusions or other terms and conditions on systemic risks in natural catastrophe or during the pandemic, EIOPA is "considering issuing further guidance on this" in the current conditions, EIOPA noted.

For now, EIOPA would concur that total direct exposure is limited and concerns will focus on the indirect macroeconomic kick-on from the conflict.

Speaking to the German daily financial newspaper Börsen-Zeitung, EIOPA chief Petra Hielkema called the direct impact from the conflict "very limited." She has a closer eye on inflation fuelled by energy commodity prices and supply chain problems. Likewise, a move in interest rates and a possible rising risk premium on assets could prove to be the more central risk, she said.

While Ukrainian claimants fall outside EIOPA's regulatory remit, the office reminds that has the channels through which it can keep an eye on matters. " EIOPA also participates in colleges of supervisors and for those insurance groups which are headquartered in Europe but have operations in third countries (including Ukraine), EIOPA will, together with group supervisors, also assess risks which may arise outside of the European Economic Area."

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