According to GlobalData’s Global Insurance Database, Russia’s marine, aviation, and transit (MAT) insurance market is the second largest in Europe, with Ukraine’s the ninth largest. In 2019, five of the top 10 insurers in the European MAT market were Russian. Furthermore, Sogaz – the largest insurer in Russia and one of the largest players in the European MAT market – has been sanctioned by major economies worldwide.
Indicative rates suggest that insurers are quoting an additional 1–5% for premium rates – potentially equivalent to hundreds of thousands of dollars per ship. The heightened risk of shipping in the Black Sea has already started to see insurers quoting additional premiums for ships still wishing to operate in this area. Russian missiles and bombs have damaged two ships off the coast of Odessa, with other freight companies suspending sailings through the region. Indeed, London’s marine insurance market deemed the Sea of Azov and the Black Sea as high risk earlier in February – discouraging a number of shipping and insurance companies from doing business in the area. Major European insurers that are exposed to the ongoing crisis include Allianz, Munich Re, and Generali, all of which are in the top 10 European MAT insurers as business in the region slows.
It is difficult to determine how the market will look in the future, with the length and severity of the ongoing crisis still unknown. Hardening rates for Black Sea shipping will likely persist for the foreseeable future, as debris and floating hazards from the war pose threats to ships making passage through the waters.
Gaz Industry Insurance Company SOGAZ, which is owned by Gazprom, has been sanctioned by major economies after insuring the construction of the bridge between Russia and the Crimean Peninsula in 2018. According to GlobalData’s Company LOB Breakdowns database, SOGAZ is the largest insurer in Russia by written premiums, with an approximate market share of 25.0% of the Russian general insurance market in 2020. The company’s global reinsurance partners include Munich Re, Partner Re, Swiss Re, and Lloyd’s of London. Although it is difficult at present to understand the longer-term implications of sanctions on Western European insurers, right now it will be an embarrassment at best. The full exposure of these firms to the Russian market will become more apparent over time.