Global insurance companies, including those at the specialist Lloyd’s re/insurance marketplace, have reportedly decided not to insure any Ukrainian landings or aircraft in the country’s airspace as the situation with Russia intensifies.
In response to the move by insurers, the Ukrainian Government has launched a 16.6 billion hryvnia (USD 592 million) fund to guarantee the continuation of flights through the region’s airspace.
On social media, Prime Minister Denys Shmygal explained that the funds “were allocated to ensure flight safety in Ukraine for insurance and leasing companies.”
Adding that, “This decision will stabilise the situation on the market of passenger air transportation and will guarantee the return to Ukraine of our citizens who are currently abroad.”
With an estimated 100,000 troops now situated near Ukraine’s borders, tensions are high and concerns are rising that Russia is poised to invade the country despite denials.
Reflecting the rising security concerns, numerous airlines have reportedly stopped flights into Ukraine, while others are said to be considering the immediate future of their flights into the country.
For airlines, the issue is that some insurers have reportedly decided to withdraw cover, while publications in Ukraine have reported that the Lloyd’s marketplace has suspended cover for flights passing through the region’s airspace.
At the same time, reinsurers have told insurers in Ukraine that their aircraft are not protected against war risks, according to reports.
Airlines without insurance protection will not be able to fly above Ukraine and given that Ukrainian Airlines leases the majority of its aircraft, this will have a huge impact on the company and individuals looking to leave and enter the country.
To limit any potential damage, the Ukrainian Government has allocated more than half a billion dollars to attempt to calm the situation and appease the airlines.