Earlier this year, McGill and Partners unveiled a war risk reinsurance facility for commercial properti
es in Ukraine, offering coverage up to $50 million per risk for assets located over 100 kilometres from the front line. Developed in partnership with FortuneGuard, and working alongside the Ukrainian insurer ARX, the facility employs AI-powered technology to analyse war damage risks using official data on projectiles fired into Ukraine.
Discussing the initiative in an interview with Insurance Business, Hamish Greenwood (pictured top right), head of crisis management at McGill and Partners noted that it represents a significant advancement from the previous maximum coverage limit. “Prior to this facility, coverage for commercial property in Ukraine was limited, especially for war-related risks.
“Local insurers could only offer policy limits up to $500K. This reinsurance facility significantly increases the available coverage, offering limits of up to $50M in coverage to be offered per risk. Additionally, the use of AI-driven technology helps underwriters assess risks more accurately and offers more affordable premiums.”
Offering insight into how this “groundbreaking” facility developed, he noted that it is the first of its kind, combining AI-powered technology with advanced data analytics to improve the understanding and underwriting of commercial property risks in Ukraine. The primary purpose of the facility is to provide Ukrainian businesses with affordable coverage for war-related risks, including damage caused by missiles, drones, air defence systems, and missile defence systems.
“The facility aims to fill a critical gap left by the international reinsurance market's withdrawal following the Russian invasion,” he said. “This facility supports Ukraine's economic recovery and helps businesses stay operational by reducing the financial impact of war risks.
Exploring the way the facility works, he pinpointed how its partnership with the Lloyd’s Lab Insurtech FortuneGuard sees official data on missile and projectile activity utilised to assess the likelihood of war-related damage, supporting risk analysis, presentation, and underwriting. By leveraging live data, this innovation allows underwriters to more accurately evaluate risks and provide affordable premiums for businesses in Ukraine.
“This facility helps mitigate the financial impact of war risks on Ukrainian businesses by bigger limited and affordable coverage for property assets,” he said. “With increased capacity, Ukrainian businesses are better protected against damage, which is crucial for sustaining economic activities and aiding the country's recovery efforts.
“There is funding waiting to be deployed as part of the rebuilding efforts, all of which will have insurance requirements. Additionally, by getting underwriters more comfortable with underwriting in Ukraine we hope this will facilitate more international capacity coming back into the Ukraine.”
The collaboration also sees McGill and Partners collaborate with leading local Ukrainian insurer ARX – which fits in cleanly with the re/insurance broker’s ambition to support Ukraine’s economic recovery and resiliency efforts. “The facility is supported by reinsurance capacity from the London market and Lloyd’s syndicates, allowing ARX to offer much bigger limits. Since the facility launched, we have quoted over $1.2bn worth of assets.”
The facility – and the partnerships that support it – are testament to the role that the re/insurance industry has the opportunity to play in helping to rebuild communities in the event of a disaster. It also shines a spotlight on the capacity of the wider market to work together to innovate and support Ukraine in navigating the devastating impacts of the war.
As Ukraine continues to mitigate a challenging environment, the insurance industry has a significant role to play in supporting Ukraine’s economic recovery. As a result, Greenwood said, there is a real need to help those living and working in Ukraine to recover and rebuild from the devastation of war. “It has taken a while to get the product designed and launched, but it will make a real difference to our clients there.
“This is just the beginning and there is certainly more we can do to build cross-market collaboration with those carriers who are supporting the facility and those who have been asking how they can get involved. We’d like to start to explore if they’re willing to offer all-risk coverage to some clients. We want to work with property and construction markets to explore how we can bring international capacity back into the Ukraine.”
