Creating insurance is necessary to solve the problems of Ukraine – International – Insurance News

Innovations in insurance through mutual funds will be necessary to deal with the problems that will arise from the conflict in Ukraine, Lloyd’s and Aon say.

Insurers have the opportunity to create new products and risk-sharing strategies to help businesses deal with uncertainty, says the entry Ukraine: The conflict that changed the world report, based on an in-depth interview with 75 risk experts.

The report found that the effects of these conflicts are highly correlated, for example international conflicts leading to an increase in cyber-attacks, which can affect inflation and market volatility.

Lloyd’s chief executive John Neal said the crisis has created a number of interconnected threats across areas such as energy, cyber and internet supply chains and a proactive and forward-thinking approach will be key to tackling the problem.

“Lloyd’s will use its technology, tools, and risk solutions to achieve that goal,” he said.

Covid, climate change and the invasion of Ukraine “have all exposed the weaknesses in our economy and our societies,” it said. “Our approach must be equally integrated. Insurance can help close security gaps and strengthen capacity but it cannot do it alone.”

It emphasizes the importance of insurance, as a major risk transfer mechanism, to help businesses reduce these associated risks and build organizational strength. The consequences of this crisis will “last a lifetime,” and the central position of insurance provides a unique opportunity to invite businesses, governments, regulators and investors to join the process of strengthening society.

Insurance companies have a “wonderful tool” for taking risks off the balance sheet and reducing exposure to the risks, as well as providing advice on risk reduction and management, and raising funds to help rebuild.

“Insurers must combine their technology, tools and capabilities to drive new products that will help businesses respond and mitigate the stress of the global economy,” the report says, adding, the insurance market will be ready to provide business continuity, business interruption, and transportation related transportation, such as ships and cargo ships.

Directors’ & Officers’ (D&O) insurance will see increased demand, and the report found the ability for businesses to diversify and ‘hedge’ their portfolios and supply chains to reduce reliance on single suppliers will be key to reducing risk.

In food security, insurers and businesses can help with production, processing, and distribution, including protection against agricultural risks, supply chain disruptions, commodity price volatility and reputational risk, as well as product recalls and spoilage.

Energy security and the impact of history will be a key factor in all sectors, with the shortage of food and energy – Russia provides a fifth of the world’s grain and 40% of Europe’s gas – and the rising business costs associated with restoring expected chains.

Aon Global Chairman of Reinsurance Solutions Dominic Christian says the controversy shows that real risk does not exist in isolation.

“Our ability to deal with the ever-increasing threats requires critical thinking, detailed planning and execution,” Christian said.

Since the start of the Russian invasion in February, millions have been forced to flee their homes, places have been left almost destroyed or unusable and thousands have been killed.

“What started as a regional conflict quickly turned into an economic, social and environmental crisis that created a global crisis. A global response was also needed to deal with the fallout,” reads the introduction to the report from Neal and Christian. he said.

“The consequences will be with us for a long time. We need to try to understand and look at the places where they are at risk.”