Legal Alerts

The Impact of the Russia-Ukraine Conflict on the Insurance Industry, Part One: Coverage, Exposure, and Losses

(August 10, 2022) - The Russia-Ukraine conflict has far-reaching implications for the insurance industry and for insurers and insureds alike. Many corporate policy holders around the world have withdrawn or scaled back operations with Russia and/or Russian-based corporations. In doing so, the corporate policy holders left behind property, assets, and inventory in Russia and/or suffered losses in revenue. Corporate policy holders are looking to their insurers to offset the losses. It is estimated that the insurance and reinsurance markets could face losses at nearly $20 billion. S&P Global predicts that losses could reach $35 billion. Additionally, the conflict in Ukraine creates uncertainty for insurers on how to navigate the influx of claims, especially from the cybersecurity sector.

A key issue with the rise in claims is coverage. The general rule is that coverage under a policy for any loss must be evaluated by considering the policy language, the law applicable to the governing jurisdiction, and the facts surrounding the loss. Many policies contain a “war exclusion” clause, which can exclude property losses resulting from acts of war or governmental instability. However, corporate policy holders may have Political Risk Insurance, which can provide coverage for losses for items such as damaged property, seized property, and lost assets at a time of political turmoil or war. Even if a policy has Political Risk Insurance, it does not guarantee payout. Careful analysis of the policy language and facts surrounding the loss must still take place. For example, in the event of property claims, an insurer must still determine whether the loss is related to the conflict and/or whether the subject property was voluntarily abandoned or seized.

Another interesting consideration for insurers is the possibility of claims for coverage regarding the penalties corporations could face for failing to comply with sanctions against Russia and Russian-based corporations. The U.S. Treasury Department, through its Office of Foreign Assets Control (OFAC), enforces compliance with sanctions and maintains a list of persons and companies tied to countries on whom the U.S. has imposed sanctions. A failure to follow trade restrictions and/or business dealing restrictions could result in civil (and criminal) penalties. Many corporate policy holders will seek protection from such penalties, if incurred, from their insurers. Again, a careful analysis of the policy language will tell whether such claims are covered.

Moreover, insurers should plan to see an uptick in claims for data breach or cyber breach losses. It is difficult for the victims of a cyberattack to know the identity of the perpetrator. Therefore, it creates another layer of complexity in evaluating cyber claims, and a general “war exclusion” clause may not be specific enough to exclude coverage. Scope and specificity in cybersecurity policies should be as clear as possible to avoid ambiguity on what is or is not covered.

As a result of the influx of claims, the insurance industry has seen an increase in premiums in specific industries like aviation, marine, energy, and cybersecurity, which have been the hardest hit industries during the Russia-Ukraine conflict. Some insurers are also considering endorsements or modifications to policies that may affect coverage for future losses.

Aside from coverage for claims, the conflict may affect Russia’s ability to secure insurance for its governmental entities and operations. The U.K. sought to have U.K. insurers prohibited from insuring the transport of oil products from or located in Russia (with some exceptions). The United States has also sought to limit insurance products and coverage to Russian oil tankers and non-Russian oil tankers that transport Russian oil. Recently, however, the EU and U.K. slowed efforts to ban maritime insurance because of concerns over what such a ban would do to the global oil supply and oil prices.

Lewis Brisbois’ attorneys have a deep understanding of the coverage issues and insurance laws being impacted by the conflict and are advising clients on managing their legal and business risk as events develop. For more information, contact the author or editors of this alert. Visit our Ukraine Conflict Response Practice page for additional alerts in this area. Read part two of this series here.


Michael Kopit, Partner


Jane C. Luxton, Managing Partner - Washington, D.C.

Andrew Pidgirsky, Partner

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