War in Ukraine: what to keep in mind in the insurance sectors

The Russian war of aggression against Ukraine began at the end of February. Shocked and horrified, the world responded with economic sanctions against Russia. We summarise the implications for insurance cover for companies.

As the news from Ukraine first came through, it brought with it an overbearing sense of bewilderment that has continued with us all to this day. The global economic sanctions against Russia immediately followed, imposed by the EU and USA, among others. What are the implications of this situation for the individual insurance sectors?

All sectors of insurance in principle have policies with war exclusion clauses. After all, war is an incalculable and uncontrollable accumulated risk that cannot be carried by either reinsurers or direct insurers. One exception to this is transport insurance, which includes international transport by sea and air.

What does the war exclusion clause mean, exactly?

In an insurance policy, a war exclusion means that the insurance cover does not extend to claims arising from war, warlike events, civil war, revolution, rebellion or uprisings, regardless of contributory causes. This exclusion remains in force even after hostilities have ended: Subsequent claims arising from adequate consequences of war – undiscovered explosive charges or mines, for example – remain permanently excluded.

Insurance cover in Ukraine and Russia

Ukraine and Russia are ‘non-admitted countries’ where insurance business through insurers not approved there is prohibited. As a result, local policies within the framework of international insurance programmes are in force in these countries. The war exclusion is part of the international policies, and is therefore also included in local policies for risks in Ukraine.

Ukraine – Local policies for risks in Ukraine include the war exclusion similarly to German policies. Whether insurance cover is in place as financial interest cover (FINC) for Ukrainian subsidiaries of German companies must be checked on a case-by-case basis. We are currently checking with the insurers whether insurance cover is available for Ukrainian subsidiaries of German companies within the framework of a Financial Interest Cover (FINC for short), and the existing programs will be examined individually. We are following developments closely.

Russia – The extent to which companies’ insurance cover is affected by sanctions against Russia depends on the sanctions clauses in the policies and how precisely these are formulated. These contracts often provide the right to withdraw from contractual obligations immediately if a business activity would constitute a violation of the new sanctions regulations. The role of Belarus in this context must also be closely observed and examined. Funk is here to support its clients and will review clauses individually.

Russia's counter-sanctions:  
Russia has put counter-sanctions into effect as of March 14, 2022. These prohibit Russian insurers - initially until Dec. 31, 2022 - from doing business with insurers, reinsurers, and insurance brokers from "unfriendly states" including Germany. The counter-sanctions mean, that reinsurance of local Russian policies under international programs is no longer possible. Settlement of payments under existing policies also appears to be prohibited. We do not know at this time whether there may also be a retroactive effect associated with the counter-sanctions.

Insofar as the local policy in Russia agreed within the framework of an international program was instructed by the insurer only after 14.03.2022 and/or is therefore not paid by the policyholder, no effective local policy (within the framework of the international program) thus comes into being given the counter-sanctions. This can also no longer be installed. In consideration of the mentioned counter-sanctions, we recommend establishing a foreign-placed local policy in Russia. Funk will support through the Funk Alliance network. The FINC coverage agreed upon beyond that remains in force in principle. Funk is in close contact with the insurers. However, we expect settlement problems in the event of claims because of the new access restrictions. Furthermore, it is not possible to obtain the information required for a settlement.

In terms of new business, we assume that insurers will no longer underwrite risks in Russia and will not offer FINC coverage. The development of the sanctions regime is uncertain, financial transactions to and from Russia are mainly impossible. Claims that do occur, can hardly be settled satisfactorily, due to the aforementioned issues.

In addition, there will probably be a general territorial exclusion, i.e. coverage will no longer be provided even for permitted exports to Russia. It is conceivable, however, that this territorial exclusion could be lifted again for humanitarian products. 


How does the war in Ukraine affect insurance cover in the individual sectors?

In the property insurance sector, there is a general exclusion for damage to property on the ground arising in connection with war and civil unrest, due to the foreseeable accumulation of damage. This includes damage to buildings, plants and their technical equipment, systems, inventory and other contents. In this context, contingency losses and dependent losses in Ukraine are also not insured.

Delivery failures due to plant closures are not insured in traditional property/loss of earnings insurance because there is no property damage. Damage to insured property would always be a requirement. If there is a non-property damage business interruption (NDBI) insurance policy in place, it will still in principle have a war exclusion clause. In the case of operational downtime due to lack of power, interruption to communication channels, interruption to the supply chain, workforce shortages, etc., each of these events has to be checked on a case-by-case basis to determine whether they are a result of war or not.

While transport insurance also has a war exclusion clause, foreign transport by sea and air are still covered. Keep in mind that in goods transport policies, war-related risks can only be covered if the goods are on board a ship or aircraft. War-related risks concerning goods transported by land in vehicles or on trains and goods in storage cannot be insured. The war exclusion clause provides insurers the right to special termination within a short period of two days, in order to be able to respond to the latest developments. Many insurers are currently making use of their right to special termination and are terminating cover for insured risks for Ukraine. Geographically, the termination generally refers to the national territory and the territorial waters of Ukraine (Black Sea and Sea of Azov) and to Russian territory within 200 kilometres of the Ukrainian border. Termination of cover for war-related risks includes transport by air in or over Ukraine and transport by sea in the territorial waters of Ukraine.

Termination does not apply to transports that began prior to termination. These goods remain fully covered until the end of their respective journeys (usually when they are unloaded from the ship or aircraft). Insurance cover is provided for a further 30 days at most for storages which started prior to receipt of notice of termination and which are insured under the Strikes, Riots and Civil Commotions Clause.

Risks related to strikes, riots and civil commotions are also generally insured in the case of transport by land and storage.

Furthermore, no more insurance certificates are permitted to be issued to Russia or Ukraine, which is why these certificates can no longer be created on the Funk client portal. Each certificate must be agreed upon individually with the insurers.

In principle, liability cover continues to be valid – within the scope and framework of the respective policies – even in Ukraine and Russia. Nevertheless, liability policies also have war/terror exclusion clauses. Under these clauses, claims due to damage caused by war, civil unrest, acts of terror or general strikes are not insured. Furthermore, sanctions clauses must be observed, which are usually an integral part of liability policies.

In the technical insurance sector, many insurers have announced underwriting bans for new business in Russia and in some cases, in Belarus as well, due to current sanctions. These bans also apply to Ukraine because of the risk situation. More insurance companies are expected to follow suit.

With this in mind, it is not currently likely that new installation projects, for example, will be able to be insured in these countries. Taking out the required local policy is no permitted in Russia/Belarus. As a result, insurance cover is generally not provided through the German master policy.

For projects in these countries, Funk therefore urgently recommends not accepting agreements in (plant) contracts where the contractor is required to provide insurance cover. Insurance should be provided by the orderer where possible.

For ongoing project cover, we assume for the time being that these remain unaffected because there is usually not an option to terminate cover. Nevertheless, insurance company lawyers are currently investigating whether there is a way to withdraw from the contracts due to the sanctions in force. In this case, termination in the event of a claim could come into play due to sanctions.

Companies should clarify early whether ongoing projects will overrun, so that there is enough time to find alternative solutions if necessary. After all, due to sanctions, it is not clear whether insurers are still prepared to provide insurance cover beyond the anticipated project end.

Industrial clients with projects in Ukraine generally have no insurance cover as a result of war exclusion clauses in the policies.

Companies and their decision-makers have a duty of care and due diligence. In the case of planned exports, for example, they should carefully review the current sanctions imposed by the EU and other countries, if applicable. Sanctions violations can lead to heavy fines and it is very unclear whether insurers would cover these.

The Russian attacks on Ukraine are accompanied by cyber warfare on both sides, perpetrated by both state and private actors. US authorities are already warning that these attacks ‘may unintentionally spill over to affect organisations in other countries’. This risk becomes clear in the example of the hacker group Anonymous, which has declared a cyber war against Russia. Despite assurances that the group’s attacks are targeted solely at the Russian government, it may be unavoidable ‘that the private sector is also affected.’

What does this mean for cyber insurance?

Like in other insurance sectors, insurers in cyber insurance also include war and terror exclusion clauses in their wordings, in order to avoid the risk of accumulated losses in the event of hostilities. If a claim arises, the determining factor would be the extent to which this exclusion applies. Is a randomly affected company outside of the countries involved in the war still part of this accumulated risk that insurers are trying to avoid? Or are such claims no longer covered by the exclusion as collateral damage? Another important consideration would be rules about burden of proof in civil procedures. If the exclusion is applied, the insurer must prove that the damage is a causal loss incurred as a result of the war.


In the vehicle insurance sector, insurance cover is still provided as long as there are no sanctions imposed by the EU or the Federal Republic of Germany. Insurance cover is provided within the geographical borders of Europe which therefore also includes Ukraine.

When it comes to vehicle insurance, there is a difference in how certain policies handle the war in Ukraine:

  • Vehicle liability insurance: these policies do not currently have a war exclusion clause. This means that third-party compensation claims (defence or settlement) are covered.
  • Fully comprehensive vehicle insurance: there is no insurance cover for damage directly or indirectly caused by war.
  • In the case of other subclasses of vehicle insurance, such as breakdown cover, motor passenger personal accident insurance, driver protection or environmental damage cover, the same situation applies as for fully comprehensive insurance: there is no cover for damage directly or indirectly caused by war.

It should be noted that with fully comprehensive insurance and the aforementioned subclasses, insurance cover is provided in the territory of Ukraine when damage is not caused by war, directly or indirectly. With fully comprehensive insurance, this would be damage incurred when parking carelessly, for example.

Credit insurance cover is affected by the current situation in a number of ways. Credit insurers are responding to the war with different measures – from limiting insured sums to introducing complete exclusions. Underwriting of new risks is suspended for Ukraine and Russia. 

There are many open questions for insured suppliers and customers, which need to be investigated and clarified on an individual basis. More information on this and your point of contact can be found here.

Insurance cover for taking in refugees

An increasing number of people from Ukraine are seeking refuge in neighbouring European countries. Germany is also expecting a large number of refugees. Many of them will depend on aid. Above all, alongside monetary aid and donations of supplies, they will need a place to live. You can read here what needs to be taken into account for the insurance cover.


We are all shocked and appalled by the war in Ukraine. Our thoughts are with Ukraine and everyone affected by this war in Europe. All companies have been forced to take immediate action with respect to Ukraine and Russia. What is happening to employees on the ground and what are the implications for the production site? After the Suez Canal blockage and the Covid-19 pandemic, supply chains are now being subjected to yet another test of their resilience. Funk will be closely monitoring further developments and remains a strong partner to its industrial clients.

The situation in Ukraine is very dynamic and there are constantly new developments. This article does not claim to be complete and serves only to provide general information and Funk’s perspective at the time of publication (see date).

19 May 2022

Your contact

Nadine Benkel
+49 40 35914-0

Dr. Alexander Skorna Ansprechpartner bei Funk
Dr. Alexander Skorna
+49 40 35914-0