Breakthrough war insurance offering from a global broker |Insurance Business Breakthrough war insurance offering from a global broker in American construction and engineering
“We got a little bit lucky.”
construction and engineering
Written by Daniel Wood
According to a map of the Ukraine-Russia war, about 20% of Ukraine is a combat zone. Eric Andersen (pictured), president of global brokerage firm Aon, said one of the frustrating things for Ukrainian companies is that even though about 80% of the country remains largely peaceful, the world He said that insurance companies and investors tend to view the entire country as a war zone.
“The real problem on the ground in Ukraine is the lack of war coverage in the local insurance market,” Andersen said. The New York-based leader recently visited Australia for interviews with the insurance industry.
“Essentially, the world market kind of pulled out of Ukraine during the invasion,” he says. “So if you’re trying to build a building, a house, a school, it won’t cover the cost of construction materials and other costs.”
But he said that through an agreement with the U.S. International Development Finance Corporation (DFC), Aon now provides war insurance for construction projects, educational facilities, small businesses and agriculture in peaceful areas of Ukraine.
“It’s all available in the local economy, local brokers are selling it, and it’s doing what you expect it to do,” Andersen said.
Prewar
Before the war, Andersen said Aon was the nation’s largest broker.
“I had the opportunity to meet with President Zelenskiy at the United Nations General Assembly a few weeks ago,” Andersen said.
He said Zelenksy’s focus is on the survival of the financial services sector.
“It’s to make sure the economy works when there’s finally peace, because that’s what he’s most concerned about,” Andersen said.
“A completely new way to pay money”
Andersen said this war insurance offering is “an entirely new way for DFC to spend its funds.”
“We told DFC that what you really need to do is not do one-off projects, but if you feel comfortable supporting one of the local insurance companies, what you’re doing is supporting that insurance company. “I said that’s what I’m doing,” he said. Because they seek greater risk and put capital into the local market. ”
He said DFC is “very particular” about how it lends out funds.
“We were kind of lucky that Fairfax, a large Canadian insurance company, had a subsidiary in Ukraine, so we partnered with that local insurance company and partnered with DFC,” Andersen said. spoke.
He said they worked together to consider the criteria for the DFC, including what risks it covers and which regions of the country it covers.
“Essentially, DFC has put US$50 million into reinsurance contracts behind the balance sheets of local insurance companies,” Andersen said. “This is a very good public-private partnership, putting money where it’s needed.”
He also said this was “creating more knowledge” among some European countries that are used to donating aid.
“What they really want to do is help find ways to build and sustain the economy through local capacity, rather than just flying something in,” Andersen said. “We have been talking to a number of countries about expanding the program or taking on some of the risks themselves, so that when peace begins, the DFC can withdraw and the private sector can re-enter. Dew.”
“Unstable” companies around the world
In the same interview with IB, Aon’s president said meetings with customers indicated they were “disturbed” by the huge risks currently facing many companies around the world and were looking to their brokers for further support. said.
“Large and mid-sized companies in Australia, Europe, Asia and North America appear to be even more volatile than they have been in the past,” Mr Andersen said.
He said this general uncertainty is not country-specific, but is seen by customers all over the world.
“No matter where you go in the world, they’re all struggling with what is considered a riskier world, and they’re looking for advice, looking for capital, trying to figure out what to do,” he said. Ta. . “I think there are a lot of people out there who are worried, and they’re looking to us[brokers]to provide them with better insights and tools,” the Aon leader said. .
What do you think about the role of the insurance industry in war-torn countries, from Ukraine to Gaza? Let us know below
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