The war in Ukraine and the economic sanctions imposed on Russia have presented significant logistical and operational challenges for organizations with business units or investments in the impacted region. In an interview with Insurance Business magazine, Partners Kirk Pasich and Sandra Smith Thayer explained that companies who have, or might experience, losses connected to the war may seek to recover losses on their property or business interruption policies, but policies will provide little comfort to businesses as they typically include “war exclusions.”
“Instead, companies should look to their political risk insurance policies, particularly any coverages that protect insureds against political violence, forced abandonment, confiscation, and expropriation,” Pasich commented. “These policies have paid substantial amounts in the past.”
Smith Thayer said there are certain steps businesses must take if they want to get coverage for their losses via a political risk insurance policy. “Many policies have strict time limitations and procedural requirements that must be met, and insureds need to act quickly to preserve their right to collect.”
When negotiating a political risk policy, she advised: “It’s very important to work on the notice provision, to give yourself time because many coverage battles turn on whether notice was appropriate or not. You need to make sure that it specifies who has to have knowledge of an event, and to give yourself enough time to give notice.”
Smith Thayer remarked that a good notice period would specify a set number of days – typically 30, but ideally 45 – in which the policyholder must alert their insurer of a situation. “After a policyholder gives notice, they are usually then required to provide regular updates to the insurer about what’s going on.”
Read the full Insurance Business magazine article here.