Aon and Marsh McLennan call on (re)insurance industry to aid Ukraine's resilience

Rhea-AI Summary

Aon and Marsh McLennan have called on the (re)insurance industry to support Ukraine's resilience by removing blanket exclusions and providing essential insurance capital. The firms emphasize that current exclusions, which group Ukraine with Russia and Belarus, impede economic growth and ignore the diversity of risk within the country. They argue that data-driven risk assessment should guide (re)insurance decisions, recognizing Ukraine's efforts to align with free and democratic economies.

Both companies are actively working with governments and international organizations to support Ukraine's economy. Marsh McLennan has expanded its public-private partnership to cover shipping to and from Ukrainian ports, while Aon has created a war risk insurance program with the U.S. International Development Finance These initiatives aim to stimulate economic expansion and strengthen Ukraine's foundation for post-conflict reconstruction.

Positive

• Aon and Marsh McLennan are actively supporting Ukraine's economic resilience
• Expansion of insurance coverage for shipping to and from Ukrainian ports
• Creation of a first-of-its-kind war risk insurance program for businesses in Ukraine
• Potential for increased (re)insurance capital flow into Ukraine's economy

Negative

• Current blanket exclusions in (re)insurance contracts limiting economic growth in Ukraine
• Grouping of Ukraine with Russia and Belarus in risk assessments, potentially deterring investors
• Confusion about risk levels in different regions of Ukraine affecting underwriting decisions

Insights

Insurance Industry Expert

This call from Aon and Marsh McLennan is a significant development for Ukraine's economic resilience. The removal of blanket exclusions could be a game-changer for the country's reconstruction efforts. By differentiating between high-risk areas and relatively stable regions, insurers can provide more targeted coverage, potentially unlocking important investment in sectors like healthcare, energy and agriculture.

The proposed data-driven approach to risk assessment is particularly noteworthy. It could lead to more nuanced underwriting practices, allowing for better risk management and potentially lower premiums in less affected areas. This could stimulate economic activity and attract foreign investment, which is vital for Ukraine's recovery.

However, insurers will need to carefully balance their risk appetite with the potential for significant claims. The ongoing conflict presents unique challenges that will require innovative solutions and possibly new forms of public-private partnerships to manage effectively.

Geopolitical Analyst

This initiative by Aon and Marsh McLennan carries substantial geopolitical implications. By advocating for the separation of Ukraine from Russia and Belarus in risk assessments, these industry leaders are effectively reinforcing Ukraine's alignment with Western economies. This move could accelerate Ukraine's integration into the European economic sphere and potentially fast-track its EU membership aspirations.

The emphasis on Ukraine as a "free and democratic economy" is particularly telling. It signals a shift in perception that could influence not just the insurance sector, but broader international economic policies. However, this approach might also escalate tensions with Russia, potentially leading to retaliatory economic measures.

The success of this initiative could set a precedent for economic support in conflict zones globally, potentially reshaping how the international community approaches economic resilience in geopolitically volatile regions.

Economic Analyst

The potential economic impact of this initiative is substantial. By facilitating insurance coverage, particularly for war risks, Aon and Marsh McLennan are effectively creating a financial safety net for businesses operating in Ukraine. This could lead to increased foreign direct investment, job creation and overall economic growth.

The focus on key sectors like healthcare, energy and agriculture is strategically sound. These are foundational industries that, if properly insured and invested in, could kickstart a broader economic recovery. The ripple effects could extend to related sectors, potentially accelerating Ukraine's overall economic reconstruction.

However, it's important to note the potential risks. If the conflict escalates or spreads to previously unaffected areas, insurers could face significant losses. This initiative will require careful risk management and possibly innovative reinsurance structures to be sustainable in the long term.

-      The firms emphasized that the removal of blanket exclusions would catalyze Ukraine's growth and future reconstruction

MONTE CARLO, Sept. 8, 2024 /PRNewswire/ -- Aon and Marsh McLennan today called on the (re)insurance industry to build upon the capital, expertise and historical role of the (re)insurance industry to help Ukraine's resilience by catalyzing economic growth and strengthening the country's foundations for a post-conflict economy. The firms emphasized that the removal of blanket exclusions, which ignore the diversity of risk throughout the country, would further support for Ukraine's economy.

Additionally, since the start of the war, many global reinsurers have grouped risks originating in Ukraine, Russia, and Belarus together, excluding them from reinsurance contracts, limiting (re)insurance capital and impeding economic growth and stability. The inclusion of Ukraine with Russia and Belarus is not rooted in the data and analytics that drive the assessment of risk and overlooks that Ukraine, while under siege, seeks to further align as a free and democratic economy and member of the European Union. 

"Marsh McLennan is dedicated in our support of Ukraine – helping it attract global investment to rebuild the country, and recover from the devastating impact of war on its people and economy," said John Doyle, president and CEO of Marsh McLennan. "We call on the global insurance community to join us in this effort and end blanket exclusions for Ukraine."

"Aon's support of Ukraine leads us to look forward to its economic recovery," said Greg Case, CEO of Aon. "Insurance capital is essential for the reconstruction of Ukraine's health care, energy and agricultural sectors. We're asking the insurance industry to look closely at Ukraine's risks and work to strengthen the public private partnerships under development."

Marsh McLennan and Aon each are already working with the Ukraine, U.S. and UK governments, along with many other international organizations, to support Ukraine's economy as it endures ongoing attacks and accelerate investment in the country's eventual economic recovery.

In March, Marsh McLennan announced the expansion of its public-private partnership with the Ukraine government to cover all shipping to and from Ukraine's ports. This follows Marsh McLennan's support in helping the Ukraine Government develop its war risk data platform which provides investors and (re)insurers with granular transparent data on the impact of the conflict to date and degree of war risk. 

In June, Aon worked with the U.S. International Development Finance Corporation to create a first-of-its-kind insurance program to support war risk policies for businesses operating in Ukraine. The availability of insurance for war risk, especially across health care and agriculture, will stimulate economic expansion and employment, while strengthening the foundation of Ukraine's economy to support a robust reconstruction.

The firms assert that arbitrary exclusions for Ukraine contribute to confusion about the vastly different levels of risk in the country. As a result, there are potential issues with how (re)insurers underwrite risks between regions directly impacted by the war and many areas of central and western Ukraine which have suffered little to no war damage. The use of data and analytics can enable more impactful insights into where insurance capital can contribute to Ukraine's reconstruction and further economic growth.

About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that protect and grow their businesses.

Follow Aon on LinkedIn, X, Facebook and Instagram. Stay up-to-date by visiting Aon's newsroom and sign up for news alerts here.

About Marsh McLennan
Marsh McLennan (NYSE: MMC) is a global leader in risk, strategy and people, advising clients in 130 countries across four businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman. With annual revenue of $23 billion and more than 85,000 colleagues, Marsh McLennan helps build the confidence to thrive through the power of perspective. For more information, visit marshmclennan.com, or follow on LinkedIn and X.

Media Contacts

Aon
mediainquiries@aon.com
Toll-free (U.S., Canada and Puerto Rico): +1 833 751 8114
International: +1 312 381 3024

Marsh McLennan
Jason Groves
jason.groves@mmc.com
+44 (0)7733 325 587

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SOURCE Aon plc

FAQ

What are Aon and Marsh McLennan calling for regarding Ukraine's insurance coverage?

Aon and Marsh McLennan are calling for the removal of blanket exclusions in (re)insurance contracts for Ukraine, urging the industry to use data-driven risk assessments to differentiate risks within the country and support its economic resilience.

How are Aon (AON) and Marsh McLennan supporting Ukraine's economy?

Aon (AON) and Marsh McLennan are supporting Ukraine's economy through public-private partnerships, including expanded shipping coverage and a war risk insurance program for businesses operating in Ukraine, aimed at stimulating economic growth and reconstruction efforts.

What is the impact of grouping Ukraine with Russia and Belarus in reinsurance contracts?

Grouping Ukraine with Russia and Belarus in reinsurance contracts has led to blanket exclusions, limiting (re)insurance capital and impeding economic growth and stability in Ukraine, despite the country's efforts to align with free and democratic economies.

How can data and analytics improve insurance coverage for Ukraine?

Data and analytics can provide more accurate insights into the varying levels of risk across different regions of Ukraine, enabling (re)insurers to make more informed underwriting decisions and potentially increase insurance capital for reconstruction and economic growth.