The global insurance market is used to discussing war risks in terms of coverage, limits, and pricing.
In Ukraine, war risk is no longer a theoretical construct or a niche extension of property insurance. It is a daily operational reality.
Over the past few years, Ukrainian insurers have gone through a learning curve that most markets only explore through stress tests or academic scenarios. This experience is not about heroism or communication. It is about how claims are actually handled when war becomes a physical risk environment.
When PVI stops being theoretical
In stable jurisdictions, political violence insurance is typically perceived as:
- an add-on to property coverage,
- a tool for large infrastructure or cross-border projects,
- a low-frequency, high-severity product.
In Ukraine, this logic no longer holds.
War risks here:
- materialize with high frequency
- take multiple forms — from direct hits to secondary damage,
- overlap with active production, energy, and logistics processes.
As a result, the key question is no longer whether war risks can be insured, but whether insurers are operationally capable of settling such claims in a controlled and professional manner.
Claims ≠ payment
One of the most common misconceptions outside Ukraine is the idea that war risk claims follow a linear process:
incident → report → payment.
In reality, war-related losses are rarely simple.
Assets affected by attacks — power plants, manufacturing facilities, logistics hubs — have multi-layered technical structures, including:
- core equipment,
- auxiliary systems,
- cable networks,
- control and monitoring systems,
- infrastructure elements with indirect or secondary damage.
Each component requires separate technical assessment, and standard claims-handling templates are largely ineffective.
In practice, war risk claims become engineering-driven analytical projects, not administrative exercises.
The limits issue: why "EUR 250,000" or "UAH 10 million" is not underinsurance
A frequent question from international partners is why war risk limits in Ukraine often appear modest.
The answer lies in reinsurance availability and affordability.
After every major attack, insurers receive a surge of requests from corporate clients. International reinsurers — including the Lloyd's market — are formally willing to quote. In practice:
- quotes are valid for hours or days,
- pricing can reach 10–15%,
- terms fluctuate significantly depending on the phase of the conflict.
Under such conditions, full risk transfer frequently becomes economically unviable for insureds.
As a result, Ukrainian insurers have developed an alternative model — providing war risk coverage backed by their own capital, within limits that are financially sustainable.
This is not a compromise.
It is pragmatic capital risk management.
Speed versus accuracy
Another underestimated dimension is claims settlement timing.
War risk claims require a delicate balance:
- excessive speed increases the risk of technical or legal errors,
- excessive delay jeopardizes business continuity for insureds.
In the Ukrainian context, 30–40 days from incident to payment is not slow. It reflects:
- comprehensive documentation,
- multi-level technical expertise,
- decision-making under non-standard operational conditions.
This balance is difficult to model theoretically but emerges through practice.
The human dimension of claims handling
An often-overlooked element of war risk claims is the human factor.
Claims teams operate:
- on physically damaged sites,
- in constant interaction with clients facing business disruption or loss of critical infrastructure,
- under intense responsibility for accuracy, timing, and capital impact.
In such conditions, policy wording alone is insufficient.
Effective claims handling requires the ability to combine technical expertise, expectation management, and professional restraint.
This dimension is largely absent from traditional claims-handling frameworks in peaceful markets.
What global markets still underestimate
The core lesson from Ukraine is uncomfortable but clear:
War risk is not a standalone insurance line.
It is a systemic stress test for underwriting, capital adequacy, claims handling, and human management.
Ukrainian insurers are currently accumulating experience that:
- cannot be fully replicated through simulations,
- is not captured in standard methodologies,
- will, unfortunately, become relevant for other markets sooner or later.
Ideally, such experience would never be needed.
But since it exists, it deserves to be discussed professionally and without illusion.
