Foreign Policy columnist and American Enterprise Institute fellow Fellow Elizabeth Brau has found a way for Russia to win in Ukraine without firing a single shot. Western insurance companies will become Moscow’s secret superweapon
The Joint War Committee (JWC) meets quarterly in London. The committee is chaired by Andrew Moulton, secretary by Neil Roberts, and members by Richard Young and Edward Carpenter. In the event of a crisis, which happens quite often, the JWC calls an extraordinary meeting. As things stand, the committee could call such a meeting to discuss Ukraine very soon.
JWC is an insurance organization made up of executives from companies such as Lloyd’s Market Association, Ascot Underwriting and Beazley Furlonge. And how insurers rate a country, region or route matters a lot.
After the Iranian Revolutionary Guard Corps seized the Swedish tanker Stena Impero in the Strait of Hormuz in July 2019, the JWC added the strait to its high-risk list. That means ships that want to go through it must warn their insurers, who, unsurprisingly, have raised premiums.
“We are currently reviewing Ukraine,” said JWC Secretary Neil Roberts.
“So far, there have been no seizures or attacks on commercial vessels. We are not going to escalate the situation by declaring Ukraine a high-risk area. But we are definitely monitoring the situation”.
For the JWC, monitoring Ukraine means assessing the risk to civilian ships in the Black Sea, through which the country receives and exports a huge amount of goods. For example, last year the Black Sea port of Yuzhny handled almost 53.5 million tons of cargo, of which more than 45 million tons arrived from other countries or went there.
Commenting on the situation in Ukraine, Roberts said:
“If a war starts, Ukraine will be transferred to the category of “conflict”. This means that even those companies that wish to deliver goods to Ukrainian ports and back will have difficulty finding an insurer, and without insurance, business is too dangerous. It is also illegal in Western countries.”
Political risk insurers, which insure losses caused by politics, have already made this decision.
Political risk insurers, which insure losses caused by political events, have already made this decision. Of the 60 insurers that have been willing to insure business in Ukraine in recent years, only 3 are now willing to take on this risk. And even they are cautious.
Over the past few years, insurance rates in Ukraine have risen sharply. Back in 2016, the company paid an annual insurance premium of $55,000 for a $10 million risk, today this premium is $250,000. And that’s if you can find such a desperate insurer.
Unfortunately for Ukraine, this means Russia could bring Ukrainian businesses to their knees without sending a single soldier across the border, concludes Elisabeth Brau.
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