Loss data from the conflict in Ukraine provides significant insight into the impact on the global re-insurance industry. Following our informal updates since the early days of the conflict, PCS has begun to publish industry loss estimates for the marine, energy, large onshore risk, and aviation categories. Initial estimates have reached approximately US$ 1 billion for the marine sector, with another US$ 2.4 billion for onshore large risk losses reported so far. PCS Global Aviation adds more than US$ 7 billion from leasing losses due to sanctions against Russia.
Marine losses come mostly from blocking and trapping vessels, and questions about recovery due to salvage remain (noting that PCS estimates are gross of salvage and subrogation). There are also open questions about whether the aggregate industry-wide insured loss will climb due to the treatment of port losses. The split between onshore and offshore losses has yet to be determined, and it could take a while to achieve clarity. Onshore losses have mainly risen from industrial and energy classes of business. Windfarm losses alone are approaching US$ 1 billion, with three solar facilities poised to take the overall renewable energy loss much higher. Steel facilities and food manufacturing should also contribute significantly to the total.
The aviation losses in Russia have been discussed alongside those from the conflict in Ukraine, but its relationship to the conflict has yet to be fully determined. Nonetheless, PCS Global Aviation estimates the industrywide insured loss to be above US$ 7 billion, with the potential for further development.
The impact of the conflict in Ukraine on the global re/insurance industry will take longer to discern than the situation behind the resulting losses. Among the many factors complicating the process is the difficulty of identifying damage and adjusting losses, much of which may have to wait until professionals can access the loss sites. In the interim, reserving may be difficult, making independent industry loss estimates crucial to effective risk and capital management.
