Reinsurers cut Russia, Ukraine from policies on Jan 1: Report

Reinsurers are excluding Russia, Ukraine and Belarus from policies offered to their insurance clients and cutting back their exposure to US hurricanes, a report from reinsurance broker Gallagher Re showed on Tuesday.

Reinsurers insure insurers and January 1 is the most important date in the calendar for policy renewals.

Some insurers have already backed away from providing cover in Russia, Ukraine and Belarus due to risk of sanctions or of steep losses.

But the January 1 renewal date is the first opportunity for many reinsurers to adjust 12-month policies in light of the war, which started last February.

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The market has come to an agreement on exclusions, which means that from January 1, "it is very difficult to find cover" for the region, Gallagher Re International chairman James Vickers told Reuters.

Without reinsurance, insurers are likely to be even more reluctant to provide cover for Russia or Ukraine, industry sources say. Ship insurers have already said they are pulling out as a result.

Reinsurers are particularly nervous about the aviation market after facing steep losses from stranded jets in Russia.

Aviation reinsurance rates rose by as much as 200 per cent on January 1 for some types of business, Gallagher Re said.

Increasing losses from natural catastrophes, partly fuelled by climate change, are also making reinsurers less enthusiastic about providing cover for US properties at risk of hurricane damage.

Hurricane Ian in Florida and other natural catastrophes caused an estimated $115 billion of insured losses globally so far this year, well above the 10-year average of $81 billion, reinsurer Swiss Re estimated last month.

US property reinsurance rates rose by as much as 150 per cent at January 1, Gallagher Re said.

Gallagher Re and rival Guy Carpenter both said this year's renewal discussions between reinsurers and insurers had been particularly fraught and some terms had been agreed last-minute.

Any rise in rates demanded by reinsurers is likely to be passed on by insurers to their corporate clients.