International reinsurers, post Russian invasion of Ukraine, have already intimated the Indian general insurers about possible impacts in terms of higher pricing and tighter terms and conditions in coming days for Indian business
Indian insurers advise India Inc to go for early renewals and not wait till last moment
Except that GIC Re writes the business of Aeroflot, the flag carrier and largest airline of the Russian Federation, business from its Mumbai headquarters, most of its Russian business are written by its subsidiary in Moscow
Russian government has asked its national reinsurer to provide reinsurance support to the local business in view of the international sanctions, said GIC Re officials.
Mumbai:
Indian general insurers, who were waiting for Apr 1 renewal, might have to rush for early renewals of their annual business as international reinsurers have already alerted them about possible negative impacts on Indian market out of Russian invasion of Ukraine and subsequent imposition of severe sanctions by Western countries on that country,
The international reinsurers have already intimated the Indian general insurers about possible impacts in terms of hardening of pricing and tighter terms and conditions in coming days for Indian business.
“Yes, we have received alerts from our global reinsurers about a possible hardening of premiums and tightening terms and conditions in coming days. The higher pricing will be impacting marine cargo, particularly movements in Black Sea, initially but if war continues, it can include property prices going ahead. We have advised out clients for early renewals to avoid any kind of complications eventualy,’’ said a senior official of New India Insurance, the country’s largest general insurance company having operations in 28 countries.
In fact one of the india’s large insurance account Air India, with a sum assured of $ 10 billion that has been acquired by Tatas from Indian government recently, is due for renewal by Apr 1.
NIA is the primary insurer for Air India.
“Though, immediately, there is no impact on Indian clients, they need to move fast as situation can further escalate in the international markets.’’ said CEO of one of the global reinsurers having its operations in India.
The sanction will also hit the placement of business of Indian joint ventures with Russian partnership.
GIC Re
India’s state owned reinsurer GIC Re has said there was no cause of concern immediately from the reinsurance market point of view.
The situation may not be alarming for now, said a senior GIC official.
GIC Re has a Russian subsidiary operating out of Moscow.
“Russian government has already asked its national reinsurer to provide reinsurance support to the local business in view of the international sanctions,’’ said the official.
Except that GIC Re writes the business of Aeroflot, the flag carrier and largest airline of the Russian Federation, from its Mumbai headquarters, most of the Russian business are written by its subsidiary in Moscow.
ECGC
Another state owned agency ECGC has carried out a review of the country risk rating of Russia as per its extant underwriting policy.
Accordingly, with effect from Feb 25, the cover category of Russia has been modified from Open Cover to Restricted Cover Category for which revolving limits (normally valid for a year) are approved specifically on a case-to-case basis.
The international trade credit insurer has already put Ukraine under its restricted category.
ECGC further clarified that this change has been made to ensure that it is able to assess and monitor the risks covered under its export credit insurance policies and to place appropriate risk mitigation measures.
“The above measure will also enable the exporters / banks in India in assessing the export payment realization prospects from buyers and/or banks in Russia,’’ said ECGC officials .
The customers have been suitably advised to contact their servicing branch of ECGC for cover on shipments to Russia, they added.
ECGC continues to monitor the situation and further review of the underwriting policy will be undertaken based on future developments. “We have neither got any claims as yet from any clients who have taken covers for their Russian or Ukraine business nor have raised our premiums for providing covers to these country,’’ said officials