Ukraine has been front and centre of the insurance market’s thinking this month.
Hot on the heels of Aon and Lloyd’s announcing a commitment to facilitate foreign (re)insurance capacity together with Vienna Insurance Group (VIG) to bolster Ukraine’s economic resilience, global governments called on the industry to step up to support the country’s rebuilding once the war has ended.
As part of the UK-Ukraine Private Finance Partnership, Lloyd’s and Aon have 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 in delivering this commitment, Aon and Lloyd’s have joined forces with one of the largest insurers operating in Ukraine, Vienna Insurance Group (VIG), to provide both treaty and facultative (re)insurance that will allow increased capacity for their local and international clients requiring cover for manufacturing and construction activities.
“Lloyd’s is committed to supporting the reconstruction of Ukraine through this new collaboration with Aon and VIG. By ensuring the country’s insurance market has the necessary capital to lead on insurance solutions for its customers, backed by the financial might of the international (re)insurance industry, we can help strengthen Ukraine’s economic resilience as it recovers and rebuilds,” explained Lloyd’s CEO John Neal.
Dominic Christian, global chairman of Reinsurance Solutions, Aon added: “This unique commitment from Lloyd’s, VIG and Aon brings together the insurance industry’s proven expertise in innovative risk management and capital solutions, and so with urgency and energy we will help to restore social well-being to citizens, communities and corporations in Ukraine.”
As the announcement was being made, politicians have lined up to support a range of new insurance initiatives to reduce the risks that will come with the massive task of rebuilding Ukraine once the current war ends.
At a global conference In London, insurance was identified as key to any hopes of driving the estimated $411 billion 10 year project which will be needed to rebuild Ukraine.
However, the UK government said a lack of insurance options that cover war-related losses is preventing a crucial flow of private investment.
As such, the UK announced a funding boost of up to £20 million for the World Bank’s Multilateral Investment Guarantees Agency (MIGA) to help support more private sector investment in Ukraine to help the country rebuild.
Broker Marsh has announced it will work with the Ukrainian government to help it unlock access to the global insurance market. As part of the support, it will provide services on a pro-bono basis to design and deliver a risk data platform that will allow insurers to assess and underwrite war risks in the country with greater confidence.
As part of that announcement, the Ukrainian government committed to sharing detailed information with the insurance industry to enable effective and targeted risk modelling to rebuild its commercial insurance market.
Marsh said it is to work with the Ukrainian government and insurers to create a platform that provides the data needed for assessment of war risks in Ukraine, which will better position the industry to start offering commercial insurance cover thus unlocking investible capital.
The broker has also put forward a proposal to Ukrainian and G7 governments for the creation of a war risk insurance pool. This would be a multinational public-private partnership based on the existing terrorism insurance pools that currently operate in several G7 nations.
John Doyle, president and CEO of Marsh McLennan, said: “The announcement by the Ukrainian government, together with the support of the UK government, are important steps towards the recovery of the Ukrainian economy from this ongoing and devastating war. Our support for this important project builds on the work we have been doing with Ukraine this year to evaluate options for war risk insurance. I am proud that our colleagues are standing together with the people of Ukraine to help them to recover as quickly as possible.”
The past week has also seen the Royal Assent of the Financial Services and Markets Bill.
The London Market Group welcomed the assent adding it has been at the forefront of calls for a more proportionate and accountable regulatory framework and the final Bill “closely reflects the measures that we have asked for over the last 18 months”.
This Bill, together with the ongoing work on developing performance metrics, represents a package of reforms that will specifically require the regulators to set out how they are facilitating the UK’s international competitiveness. Given the extensive new rulemaking powers they now have; these measures will be instrumental in ensuring they are focused on improving both day to day operations and attracting new entrants and investment to the UK.
LMG CEO Caroline Wagstaff, explained: “The focus must now shift to ensuring a speedy implementation of measures. The issue here is now about the pace of change – what are the regulators going to change to deliver on the new secondary objective, how fast will they implement those changes and how will the success, or otherwise, be measured. This is vital if the UK is to keep pace with the increasingly fierce international competition for investment. We look forward to continuing to work with the Government to make a success of these important changes.”