As conflict persists in regions like Ukraine and the Middle East, the war risk insurance market is gaining increased attention. This specialized insurance is designed to protect individuals and businesses against damages resulting from military actions.
Natalia Grishko faced damage to her apartment near Kyiv due to a Russian missile strike last November. Fortunately, she was not harmed. Her daughter, Alina Kalcheva, reported that the missile landed approximately 100 meters from their building, causing significant damage to the balcony and interior. Notably, they had secured war risk insurance specifically to cover such incidents. Following the damage, the insurer provided a payout of $1,000 for repairs, illustrating the potential benefits of this type of coverage. The annual premium for the insurance amounted to $52.
Similarly, Ekaterina Vasylieva, another Ukrainian resident, obtained a war risk policy for her vehicle. This decision proved timely when her car was struck by debris shortly after the policy was in place. She expressed gratitude for the coverage that mitigated repair costs.
War risk insurance has been evolving, particularly since the attacks on September 11, 2001. While individuals can purchase these policies, the majority are acquired by companies for their operations in volatile regions. Current estimates suggest that global spending on war risk insurance reaches approximately $1 billion annually, with a substantial portion directed toward specialized insurers in London, the hub for this market.
Premium rates for policies vary significantly based on conflict severity and geography. For example, businesses operating in high-risk areas might pay premiums between 0.5% and 2% of the total coverage amount. Different types of coverage can address various risks, ranging from terrorism to kidnapping.
Estimating premiums remains challenging, as wars often represent unpredictable events, complicating the establishment of pricing models. However, experts note that war risk insurance may be more financially viable than traditional lines of insurance, given the lower frequency of claims relative to other sectors.
Source: https://www.bbc.com/news/articles/c15kzjkqpqeo?at_medium=RSS&at_campaign=rss