The full extent of insurance and reinsurance losses stemming from the war between Russia and Ukraine remains a murky subject with many unknown factors, but analysts at Fitch Ratings are confident that the war will prove to be a “contained risk” for the market.
The industry at large is still in the dark about where the overall loss figure from the war will end up.
There have been a variety of strategies utilised by individual companies in reserving for this event, with many looking to “bleed” in the results for losses on their estimates, as they come in.
This is similar to how many firms approached reporting for COVID-19 losses, much of which still remain incurred-but-not-reported (IBNR).
Unlike with the pandemic, most re/insurers will have been able to immediately drop their exposure to the conflict after an initial heavy loss.
We have to be aware that the industry – be it the cedants or the reinsurers themselves – will cut exposure to Russia and Ukraine relatively quickly, either because they have to, or because they consider it to be uninsurable or not to be priced
“So the timeframe that we’re talking about, where claims have erupted, is a relatively limited one. It’s between the outbreak itself, and then a couple of weeks to maybe one to two months later. So there are no new claims accumulating to a significant extent that are directly caused by the war itself. And so, in principle, it is a contained risk.”
The challenge facing re/insurers remains fundamentally different to excess mortality losses from COVID, where new losses have continued to accumulate over time.