By Ukraine Rebuild News Staff, Sept 14, 2023
The world’s most powerful nations should create a “war-risk pool” to restore Ukraine’s insurance industry and insure the companies, organizations and people seeking to undertake the reconstruction of Ukraine, said executives from companies owned by global private services firm and risk specialist Marsh McLennan.
Writing in the trade journal The Insurer, Julian Enoizi, the Europe CEO of Marsh McLennan’s global risk specialist firm Guy Carpenter, and Andrew Bailey, principal of its management consultancy Oliver Wyman, said the current lack of war-risk insurance to cover investments and property in Ukraine will prevent large-scale reconstruction unless an organization such as the G7+ work to address the issue.
“The insurance industry – in Ukraine or elsewhere – has never habitually covered war risks at anything approaching the scale required,” the pair wrote in the trade journal The Insurer. “Even once the current ‘hot’ phase of war has ended or diminished significantly, an elevated degree of risk will remain in the eyes of private insurance markets for a number of years.”
Marsh McLennan, a pro-bono adviser to the Ukrainian government, has studied the issue in collaboration with the UK and Ukraine, with emphasis on a “war-risk pool” that would create “the conditions for the functioning of the conventional property insurance market, which itself would enable investment to flow at the scale required,” Enoizi and Bailey wrote.
“Importantly, this would depend on the provision of a government backstop that would likely need to be provided by G7+ governments,” they said. However, “we do not believe that government appetite yet exists for the development of such a scheme.”
Marsh McLennan is currently working with the Ukrainian government to develop a war-risk data platform for use by authorized underwriters and investors to assess war risks and carry out actuarial analysis, they said.
