Ukraine invasion to impact global insurance industry ‘substantially’ in near to midterm

Written by Adam Cadle

28/02/2022

Russia’s invasion of Ukraine likely will impact the global insurance industry “substantially in the near to midterm”, particularly given the “significant fallout in the capital markets and potential for widespread cyber attacks”, AM Best has warned.

In its latest commentary entitled, Significant Implications of Ukraine Invasion on Global Insurance Industry, AM Best noted that the invasion has had an immediate negative impact on the stock markets worldwide; continued volatility remains likely, challenging efforts by the global central banks and the US Federal Reserve to contain inflation.

In addition, it said sanctions against Russia may have severe knock-on effects not just on oil and commodity prices but also tourism, as well as the economies of some of the world’s less resilient countries.

“Sanctions will affect the balance sheets of Russian insurers and their relationships with international partners,” AM Best financial analyst Todor Kitin said.

“The valuation of investments would be affected by a prolonged equity market downturn, any increase in the Russian Central Bank’s policy rate or a widening of credit spreads. On the other side of the balance sheet, higher-than-anticipated inflation would impact claims costs, with potential implications for the adequacy of reserves.”

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