Re/insurance bill on Ukraine war now at $20bn and counting

The war in Ukraine could deliver insured losses in excess of $20 billion, roughly half in aviation, to become the “largest industry-wide insured loss across all classes of business in history.”

Preliminary estimates from Verisk's claims services unit PCS, built on talks with clients across affected lines, come with a heavy dose of uncertainty. Analysts expect a delay of “months after any cessation of hostilities for loss adjusters to begin to understand the insurance industry impact.”

Aviation could deliver half of the sum total, with note that final costs will be spread across a multitude of business lines, not just all-risk or war-hull, and throughout the aviation industry supply chain from manufacturer to lessor and others.

“The losses may be more distributed than market participants currently expect, with the entire supply chain potentially sharing in the loss,” PCS analysts wrote.

Add in losses from airports for another 20-40% and the PCS working estimate hits “a realistic potential range” for industry-wide aviation insured losses at $7-13 billion. PCS splits the difference for a $10 billion best guess.

Marine losses could mistakenly appear capped following announcement of broad war-zone exclusions after impact on only six vessels.

“There is still the possibility for insured losses to accumulate to multiple billions of dollars,” analysts wrote. Blocking and trapping could bring as much as $1 billion in claims. Port closures could render $2 to 5 billion.

It's time that will tell, analysts warned of the outlook for marine. Trapping and blocking are necessarily late reporting claims and port closures accumulate.

The energy segment will deliver a late bill and early estimates can be little more than guesses, PCS warned. “Client conversations suggest that industry-wide insured losses of above $2 billion seem likely, particularly with windfarms and nuclear facilities potentially accounting for half that.”

Property per risk lines could prove the wildcard, potentially second in scope after aviation, but with too many unknowns to call.

Property per risk losses could take the longest to accumulate, given that a large number of companies could be affected across numerous segments including manufacturing, mining, TMT, financial services and consumer lines.

What's more, limits could be high, and business interruption could contribute significantly. The PCS minimal forecast: $2 billion; the working estimate: $3 billion, the high-end estimate: The sky (aviation) is the limit.

Only personal property and SME are largely off the hook where insurance penetration and property values have been too low to generate insurer concern.