This article was published by Insurance Business Magazine on September 6th, 2023.
For NGOs and charities providing aid and other services to the war-torn Ukraine, finding stable and comprehensive insurance that is affordable has been an issue, due to the large losses experienced in the area and an increase in exposures.
Meanwhile, brokers risk errors & omissions (E&O) missteps if their clients are in the dark about what their policy covers, a senior partner at membership scheme Inherent Risks has claimed.
NGOs that had policies written before the war broke out would not be able to go back to that insurer and receive similar rates or coverage, according to Dan Kaine, senior partner, risk & crisis advisory at Inherent Risks.
“There's five policies that have been basically repurposed or they existed before, they didn't experience any large losses, because they didn't have any clients in Ukraine at the time,” he said.
“Therefore, they said let's offer this, but at astronomical rates to a point where NGOs and media organizations had no choice but to purchase — it was about supply and demand, basically.”
The situation in Ukraine has led insurers to look to exclusions and provisions.
Kaine gave the example of offering an emergency assistance line but with a self-rescue provision, which he claimed could be viewed as a contract within a contract.
“There's five policies that we know of that are being sold in Ukraine, four of them are what they call self-rescue,” Kaine said.
Insurers make an agreement with the client that they will pay for their services, but not until they get to Moldova, Romania, or Poland, essentially mandating that the insured flee Ukraine in order to receive their promised aid, according to Kaine.
“You don't want to call your emergency assistance line and be told to get into a taxi and notify the insurer when you get to Poland,” Kaine said. “By that point, the emergency is done, and then just becomes a claim. That's not an emergency response, it’s just a claim service.”
Selling these self-rescue policies can also have broader implications that can directly affect the brokers who are tasked with selling these products, as well as the companies that provide them, Kaine claimed.
“There are some brokers [for] companies who are sending their staff from a duty of care side of things into a war zone and telling them that the right coverage is in place,” Kaine said.
“And if something were to happen, [the insureds] were assured that someone will come and get you, either because that is what they were told, or the company or broker didn’t understand all the complexities of the coverage.”
This could lead to an errors and omissions (E&O) claim, according to Kaine, who alleged: “These products do not live up to conduct risk compliance for errors and omissions.”
This is especially true in a situation when a carrier is promising to pay a claim once an insured has returned from a war zone, Kaine claimed.
While NGO and aid workers are on the job, they are effectively on their own, leaving them vulnerable to medical emergencies and other crises.
When speaking with these individuals and organizations in Ukraine, “99% told us the same thing, that we have a global policy in place, but it doesn’t cover Ukraine, and if it is included, we’re not sure what it actually covers,” Kaine said.
They also learned that most had a global insurance policy in place that excluded Ukraine, and many could not afford to take out another policy that was more inclusive of their needs.
“I made my way into Ukraine within 36 hours of war happening and we've been in the country ever since on behalf of Lloyd’s and various different organizations,” Kaine said.
“It was just a matter of listening to what everybody's problems were,” which culminated in Inherent Risks’ Ukraine War and Accident Membership, which includes medical and crisis response with no war exclusions.
It also provides in-country teams to respond in the event of an incident to ensure conduct risk compliance and to mitigate against E&O for brokers and employers.
Since Inherent Risks’ inception, the company has tapped into the expertise of underwriters and brokers with a specialty in hotspot zones that had been providing coverage for Iraq and Afghanistan for years.
“They worked with us tirelessly and didn't offer a single insurance policy in Ukraine until they were sure that we could respond properly,” Kaine said.
Having the coverage propositioned as a “membership,” which can be purchased on a day-to-day basis without any term limits, was another crucial element.
Most NGOs operate on a daily basis, which is dictated by how much budget it has available, with the average length of a trip being 21 days.
“I'm not going to name the companies, but there's three very large insurers who sell global policies and this has actually fixed a problem for them, whether they admit it or not,” Kaine said.
“We've also had an insurance company contact us and ask if we can underwrite their insurance policy just for Ukraine. They would buy a membership from us and then inform the client that they are indemnified through our membership, but on their binder,” he said.