Page 18 - Insurance Times January 2023

policies for 2023 to exclude claims be able to support the club for this when reinsurance contracts come up
linked to Russia’s war in Ukraine, a fur- exposure,” it added. for renewal on Jan. 1.
ther sign of the industry’s growing con-
Fixed premium insurance products are But McGill said the cargo facility was
cerns about losses stemming from the
often geared toward smaller ships, in- set up in such a way that the insurers
conflict.
cluding those carrying dry commodities on the program share the risk, without
At least 12 of the 13 organizations like grains. the need for reinsurance.
within the International Group of P&I
In contrast, big oil tankers, for which
Clubs — the main insurer of risks such Munich Re to Launch Spe-
spillage claims can run into the billions
as collisions and spills — have changed of dollars, tend to be covered under cialty Insurance Division
their policies to exclude claims stem-
poolable policies, in which large losses Munich Re is launching a new division,
ming from Russia’s invasion of Ukraine
are eventually made up by higher pre- called Global Specialty Insurance (GSI),
in recent days. The 13 clubs are
miums across members. Cover for which will be comprised of various pri-
mutuals, owned by the shipping com-
poolable policies remains in place. mary insurance businesses from the
panies whose fleets they cover.
group that are currently part of the
Insurance is a critical part of merchant Insurance Rates to Stay reinsurance segment.
trade and without it some owners and
Flat for Shipments of The restructuring, effective on Jan. 1,
companies hiring vessels may be more 2023, will not affect ERGO, the
Ukraine Grain: Lloyd’s In-
wary of going to Russia or Ukraine. company’s primary insurance division.
The amended terms apply to what are surer Ascot GSI will be headed by Michael Kerner
known in the industry as non-mutual, A cargo insurance facility providing (57 years old), who was recently ap-
or fixed premium, war-risk policies — cover for shipments via Ukraine’s grain pointed to the Board of Management.
from which a higher-than-expected export corridor will continue next year
Munich Re said the aim of the restruc-
level of claims can’t be recovered from with no rate increases, an underwriter
turing is to continue “to support the
a club’s members at a later date. with Lloyd’s of London insurer Ascot
very good business performance” seen
said
The shift is the latest indication that a by its primary insurance businesses,
broad-based pullback by reinsurers Ships entering the three Ukrainian while driving further expansion in spe-
from covering claims linked to the war ports that have been part of the U.N.- cialty primary insurance business.
is impacting cover for vessels serving backed agreement are usually re- The new GSI division mainly comprises
Russia and Ukraine, though some key quired by their banks to have various business units from the risk solutions
policies remain in place. Earlier this insurance policies in place, including field, such as American Modern Insur-
month, some of the world’s largest hull and cargo war cover, which is re- ance Group (AMIG), HSB, Munich Re
reinsurers warned that they would stop newed every seven days. Specialty Insurance, Munich Re Syndi-
underwriting risks linked to the war. cate and Aerospace as well as Great
War and other insurance rates are
Lakes Insurance (GLISE).
These adjustments to cover are a con- generally expected to rise sharply
sequence of those reinsurers’ deci- across the board next year because of In the course of the integration, pre-
sions. the conflict, natural catastrophes and mium volume is projected to increase
high inflation. from around €7.5 billion ($8 billion) at
“Due to the impact of losses from the
present to almost €10 billion ($10.6
Russian/Ukrainian situation affecting “The ‘AsOne’ Black Sea facility will con-
billion) by 2025, in line with the
the availability of global insurance and tinue unabated with no planned in-
company’s “Ambition 2025” strategy.
reinsurance capacity, the Club’s creases to rating,” Chris McGill, Ascot’s
(With Ambition 2025 Munich Re aims
reinsurers are no longer able to secure head of cargo, told Reuters by email.
to generate a high return on equity of
reinsurance for war risk exposure to “This is against a supply-driven, rate- between 12% and 14% by 2025.)
Russian, Ukrainian or Belarus territo- hardening environment in the marine
Kerner, a U.S. citizen, joined Munich
rial risks,” UK P&I, one of the Interna- war market.”
Re in December 2018 and has been
tional Group’s 13 members, wrote in
Aviation and marine war insurers are responsible for Munich Re Specialty
a notice of cancellation to its clients.
concerned that reinsurers – who insure Insurance in North America. He has
“Reinsurers have advised the club that the insurers – will exclude the whole more than 30 years of experience in
as a consequence they will no longer Ukraine, Russia and Belarus region the global insurance industry.
The Insurance Times January 2023 15