The Pakistan Economy Watch (PEW) on Thursday said the war between Russia and Ukraine is shaking the global insurance industry and the share price of big multinational insurance companies is falling.
Pakistani companies will also be affected as they rely on major companies operating in the western countries for reinsurance with an aim to spread risk to reduce burden, it said.
The war is causing huge losses across the world. Over 400 Western companies have left Russia while Putin is considering confiscating the assets of Western companies, said Dr. Murtaza Mughal, President PEW.
Under these circumstances, major insurance companies that have suffered heavy losses because of the coronavirus will have to pay billions of dollars in insurance claims which could lead to bankruptcy of many companies, he added.
Concerns about insured ships, buildings, and grain reserves are growing, with the biggest losses expected in the aviation insurance sector as hundreds of airplanes from other countries are stranded in Russia.
The seas around the area have been declared a high-risk area, and a warning has been issued to the ship operators stoking fears, he said.
Dr. Mughal said that due to the challenges the insurance companies are making fundamental changes in their policies, trying to cancel short-term contracts, new contracts are being avoided.
Some contracts are made, but because of the risk involved, higher premiums are being charged increasing the cost of doing business.
AerCap Holdings NV, the world’s largest aircraft-leasing firm, is seeking about $3.5 billion from insurers related to jets and engines stuck in Russia following the invasion of Ukraine.
Experts believe that the losses of the current crisis for the insurance industry will exceed the losses of 9/11 and there will be many lawsuits in the courts, he said.
