Insurance premiums are doubling or more for some aviation and marine companies particularly exposed to war in Ukraine, raising costs for airlines and shipping companies, industry sources say.
Global commercial insurance premiums rose 11% on average in the first quarter, according to insurance broker Marsh, which said the war was putting upward pressure on rates.
But the overall figure masks more marked movements in certain sectors and only covers the first five weeks following the invasion.
War is generally excluded from traditional insurance policies. Customers buy extra war cover on top.
Garrett Hanrahan, global head of aviation at Marsh, said air warfare insurance was no longer available for Ukraine, Russia and Belarus as a result of the conflict.
For the rest of the world, air war cover has doubled as insurers try to recoup some of their losses, he said.
“The hull war market is starting to rebound on the back of rate hikes.”
The conflict, which Russia calls a “special military operation”, could result in insurance losses of $16 billion to $35 billion in so-called “specialist” insurance classes such as aviation, navy, commercial credit , political risk and cyber, S&P Global said. in a report.
Aviation insurance claims alone could total $15 billion, S&P Global said, with hundreds of leased planes stranded in Russia following Western sanctions and Russian countermeasures.
An aircraft rental company has described recent rate increases on its insurance as “not a pretty sight”.
Some aircraft lessors – a particularly exposed sector of the market because their planes are stuck in Russia – now had to pay 10 times their original premium, one underwriter said, while another said insurers could “appoint their price” to the lessors.
In ship insurance, policyholders pay an additional ‘infraction’ premium when a ship enters particularly dangerous waters, locations which are uncovered by Lloyd’s market.
For the area around Russian and Ukrainian waters in the Black Sea and the Sea of Avov, this has increased several times, according to three insurance sources, to about 5% of the value of the ship, compared to 0.025% before the invasion. , or millions of dollars for a seven-day policy.
Each time a vessel enters these waters, it must pay this additional premium.
Tariffs for vessels entering other Russian waters have also risen by at least 50% after Lloyd’s Market rated all Russian ports as high risk, two of the sources said.
Due to the dangers, some marine insurers have also stopped covering the region.
(Reporting by Carolyn Cohn, Jonathan Saul and Noor Zainab Hussain, editing by Angus MacSwan)
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