Insurance

24.03.2022

Insurance services are part of the risk management for a company’s financial health. Ukrainian business insures many risks: life and health, responsibility before third parties, cargo insurance, construction, equipment, etc. However, such policies may contain exceptions from coverage and if the damage is caused as a result of military hostilities, terrorist acts or political violence. First of all, we recommend checking previously purchased insurance policies for available war or political risks exclusions. 

During the martial law in 2018, the insurance market did not discontinue insurance claims payments [1], but there were many rejections after the hybrid aggression on the territories in Donetsk and Luhansk Oblasts and the annexation of the Autonomous Republic of Crimea: the policy often would not recognize as a covered risk any events that occurred on the territory of military and combat zones (regardless a causal link with such actions) [2] or require a separate premium to cover the risk of war, and other risks: armed conflict, the introduction of martial law, requisition or seizure of enterprises, etc. [3]. Similar products are also used by the Armed Forces of Ukraine and the National Guard. 

 

Evidently, it is impossible to purchase new policies to cover military risks during active hostilities. If you have already purchased a policy covering war risks, or such coverage is incorporated into existing one, then it is necessary to analyze in detail the relevant provisions. Specialised political/war risk insurance policies in a similar fashion contain a list of insurance events and a number of exclusions. That is, not every loss, even caused by warfare, is guaranteed to be reimbursed. For example, the policy may cover only the direct material damage, and does not cover the seizure of the enterprise, or other deprivation of use the insured property.  

 

Insurance policies ,particularly, referring to aviation and maritime risks, provide for cancelation of military risks coverage by the reinsurer [4], - most reinsurance policies contain the reinsurer’s right to change or withdraw coverage as well as reassess risks unilaterally under exceptional circumstances. As a result, aircraft and maritime vessels may refuse to provide commercial transportation services where insurance coverage is required by the law or when the risks are too high and outweigh the potential liability for the breach of contract.  

 

[1] https://mind.ua/news/20191022-vvedennya-voennogo-stanu-ne-e-pidstavoyu-dlya-vidmovi-u-strahovij-viplati-nackomfinposlug, https://insurance.vidi.ua/ua/press/kasko-v-usloviyah-voennogo-polozheniya/ 

[2]  See paragraph 2.3 of the https://arx.com.ua/uploads//oferta_152_vid_04.06.2018_dtsv_vidshkoduvannya_franshyzy_2000_po_ostspv.pdf 

[3]  See paragraph 10.1.1 of the https://ulf.ua/files/casco_tas.pdf

See. p 5.1.1.1 https://shop.pzu.com.ua/docs/%D0%A1%D0%9A%20%D0%9F%D0%97%D0%A3%20%D0%94%D0%BE%D0%B3%D0%BE%D0%B2%D1%96%D1%80%20%D0%9A%D0%94%D0%94%20doc.pdf 

[4] https://interfax.com.ua/news/economic/798008.html 

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Serhii Uvarov 

Partner, International Arbitration, Cross-Border Litigation