Is a loss of property during the war an insured event?

Yes, it is, but only if the property was insured against war risks. That is to say, in 99.9% of cases, in fact, it is not.

Before 2014, it was not a routine practice in Ukraine to insure property against war risks. Ukraine's insurance market, for the most part, did not offer such an insurance product, except for a few isolated cases that nobody was aware of, not to speak of the fact that it was done on reinsurance terms. Those were, however, more often than not, exceptions. 

Moreover, after the annexation of Crimea and the beginning of combat operations in Eastern Ukraine, insurers and, first of all, foreign reinsurers, began to wonder whether the events in Eastern Ukraine were a war. After all, as we can recall, at that time the Ukrainian authorities did not dare to call a spade a spade... ATO. Not war. No martial law or the state of emergency was imposed in Ukraine.
In February 2014, russian federation troops invaded and occupied the Autonomous Republic of Crime, which is a territory of Ukraine. At that time, the russian federation did not acknowledge its involvement and presence of its military forces in the territory of Ukraine. After the withdrawal of Ukrainian troops from the Crimea, russian troops approached the eastern border of Ukraine. During the period of the conflict in Eastern Ukraine, continuous shelling of the regular Ukrainian army and heavy fights over strategic sites such as Donetsk airport took place on a regular basis. Thus, the russian federation initially invaded, occupied and annexed the territory of Ukraine, and later launched numerous attacks on the Ukrainian military forces, thereby committing an act of military aggression against Ukraine. Although the russian federation has not openly acknowledged its involvement in the conflict in Ukraine, there is ample evidence that russian soldiers, tanks and air defense forces were present and were fighting against Ukrainian troops in Eastern Ukraine. 

Since 2014, some companies that had their businesses in Eastern Ukraine, in the area of ATO or near the contact line, have started to insure their businesses against political risks, although not on a large scale, but somewhat more actively, fearing the loss of business (property, assets) as a result of hostilities in Eastern Ukraine. Business in Eastern Ukraine turned out to be the most endangered due to the ongoing active military actions.

The situation changed drastically on 24 February... Now the whole world can see that Ukraine is in the middle of a war, a real war, not just a sort of “special military operation.” The number of residential buildings, schools, hospitals, food stores, oil depots, high voltage power lines, electrical power stations, gas pipelines and other infrastructure facilities that have been totally destroyed (demolished) as a result of fighting, artillery shelling and airstrikes launched by the enemy has already reached thousands.

In addition, there is a threat that the enemy may launch a nuclear strike and use chemical weapons.

Thus, the key insurance risks, against which the property must be insured, are now those that used to be excluded from the insurance coverage (not considered as an insured event at all), such as loss (destruction, damage) of insured property as a result of military actions, maneuvers or other military activities; confiscation or destruction of insured property by order of government authorities; impact of nuclear energy, technological accidents, pollution or contamination of territories. After all, it is not about property only.

Moreover, since the war is raging in the country, today there is hardly anyone who would risk insuring property, even in areas that are now relatively peaceful, because the risks of the events against which the property must be insured are extremely high. Clearly, it is impossible to insure any property in the areas where the hostilities are now active. The insured risks have already occurred there.

However, speaking about the actions that will be needed to restore the economy and rebuild the destroyed facilities, we could have an efficient tool for this by insuring property, assets, businesses, road, transport and agricultural infrastructure, and other facilities against military and political risks (military actions, aggression (invasion or attack of foreign armies on the Ukrainian territory, occupation or annexation of a part of Ukrainian territory), wars (declared or undeclared warfare between two or more nations, countries or states), political violence (coups d'état, assassinations, revolutions, civil war), impact of a nuclear power, technological accidents, contamination of territories, etc.).

Author: Oleg Kachmar