This article was originally published by Policy, the Israeli Insurance, Pension and Finance newspaper on 5th February 2023.
The ongoing conflict in Ukraine has far-reaching implications, extending beyond the immediate devastation and disruption to the long-term economic recovery and legal infrastructure of the nation. Insurance and reinsurance will play a key part in the recovery, supporting the reconstruction and investment efforts which Israeli companies and their supporting local and global insurers will be participating in.
Insurance and Reinsurance: A Critical Mechanism in Times of Conflict
In the face of an ongoing conflict in Ukraine, the practical implications of insurance for post-conflict recovery and restoration are increasingly being recognized. The forthcoming reconstruction effort is predicted to be substantial, necessitating the involvement of private insurance and other businesses for successful execution.
The conflict has inflicted considerable damage, thereby escalating the need for foreign investment and heightened insurance protection. However, the insurance environment in Ukraine is characterized by inherent complexities. The nation’s developing status and a nascent legal system present distinct challenges for foreign businesses and insurers in managing Ukrainian risks.
The Ukrainian insurance market lacks the capacity to assimilate the country’s economic risks fully. Consequently, it relies heavily on the London Market and the European reinsurance sector. International brokers such as Marsh, Willis, and Aon handle major industrial risks, with most direct policy wordings used in Ukraine based on language initially prepared by the London Market. This leads to the standardization of policy wording, an essential factor for efficiency in underwriting, claims handling, and reinsurance.
What does this mean for Israeli exporters and their insurers?
Insurance policies for international corporate policyholders operating in Ukraine, including Israeli exporters of goods and services, particularly in the infrastructure sector, are often part of a larger, multi-national programme. This may include a local policy issued by a local insurer governed by Ukrainian or Israeli law, sitting under a master policy issued by a London, European or Israeli insurer and governed by the law of that insurer’s jurisdiction.
This means that Israeli exporters involved in the Ukraine reconstruction efforts along with their own insurers and reinsurers will have to navigate not only the multitude of challenges presented by the particularities of the Ukrainian post-war landscape as a whole, but also the added complexities arising from unusually complex insurance towers and wordings reflecting the Israeli and global insurance industry’s risk appetite for potential claims associated with a jurisdiction such as Ukraine.
More than ever, the insurance industry will therefore require specialist guidance on complex wordings and coverage issues, including where disputes arise across a number of relevant jurisdictions including Ukraine and Israel. Expertise is most likely to be required in specific lines of business including D&O, construction (CAR/ EAR), pollution liability, cyber, boiler and machinery breakdown, fidelity, marine, and export trade risks.
Kennedys’ Ukraine Desk
Kennedys is uniquely placed to assist insurers and reinsurers given its global footprint, including offices in all major international insurance hubs, as well as Israel itself. Understanding the intricate challenges presented by the ongoing conflict in Ukraine, Kennedys has also created a dedicated Ukraine Desk consisting of experienced, Ukrainian- (and Russian)-speaking lawyers who are also qualified to provide advice on Ukrainian law.
The firm’s ability to advise on Ukrainian, Israeli and English law allows us to offer a one-stop solution. This holistic approach enables us to help clients take a strategic view on the complex cross-jurisdictional and conflicts of laws issues that are likely to arise in the context of the Ukraine reconstruction efforts.
One of the Ukraine Desk’s most recent initiatives is the launch of Spilka – a dedicated global community, led out of our London headquarters, committed to helping with Ukraine’s post-war recovery and the strengthening of the Rule of Law in that country.
The core objective is to develop a comprehensive, multi-jurisdictional network of lawyers with legal knowledge and expertise that can provide immediate help as soon as the conflict ceases and Ukraine is free to embark on its journey to economic recovery.
As a member of Spilka, Ukrainian lawyers and lawyers from many other countries have access to a number of resources including training, education, and mentorship opportunities. The community also serves as a platform for networking, promoting collaboration and the establishment of professional relationships. Spilka also serves as a conduit for law firms and organizations seeking to recruit Ukrainian lawyers and establish legal partnerships with Ukraine.
In celebration of this launch, Kennedys invites you to a special event at their office on 14th June 2023. This event, organized ahead of the International Ukraine Recovery Conference in London, is an opportunity to discuss the post war recovery and development of Ukraine and to celebrate the launch of Spilka. Don’t miss this chance to be a part of this pivotal conversation and contribute to the recovery efforts for Ukraine. Registration for attendance at the event on 14th June in person or on-line can be made through our LinkedIn profile “Spilka – Uniting Legal Minds” - https://www.linkedin.com/groups/12783163/.