Initial PCS estimates for losses arising from the war in Ukraine

Posted 22/04/2022 – Quick takes

PCS (Property Claims Service), part of the Verisk specialist insurance risk information group, have released their initial estimate for insured losses arising from the on-going war between Russian and Ukraine. PCS state that it will take many months after the cessation of hostilities for loss adjusters to provide an accurate estimate of the insurance impact of the Russian invasion of Ukraine but believe that it is possible that global (re)insurance losses could be more than US$20bn.

PCS have provided the following initial estimates across several classes of business:


This class of business has been the main focus in the media, given the potential insured losses from the aircraft leasing policies. Public estimates have ranged from US$5-10bn which would make it the largest aviation insured loss event in history – but PCS believe that the actual loss to the market is likely to be far more nuanced, given that the losses may span segments of the aviation market, rather than involving binary outcomes specific to all-risk or war-hull. Take-off and landing restrictions may exacerbate aircraft-related losses, as well as the impact of sanctions on required maintenance. Airport losses may also increase claims in this class. PCS therefore have a range of US$7-13bn for industry-wide aviation insured losses, with a working estimate of US$10bn.

Property per risk

PCS believe that property per risk losses could take the longest to accumulate, given that a large number of companies may be affected and that business interruption might contribute significantly. PCS see this class of business as potentially the second largest contributor to the overall industry-wide insured loss in Ukraine, after aviation. Steel and grain facilities are likely to see the bulk of insured losses, as well as mining and financial services. PCS believe that losses are likely to exceed US$2bn but are finding it difficult to arrive at a more accurate forecast.



Because the Black Sea and Sea of Azov were designated as war areas by the Joint War Committee, PCS believe that insured losses from the conflict will be manageable, albeit with scope to accumulate up to US$3-6bn, with US$5bn as a working estimate.


PCS expects most insured energy losses to come from the onshore sector. Industry-wide insured losses of above US$2bn are thoughts to be likely, with windfarms and nuclear facilities potentially accounting for half of that total.

Personal and small commercial property

This category is not expected to comprise a significant portion of the industry loss, with PCS sources suggesting a cUS$100m loss due to Ukraine’s low rates of insurance penetration and lower insured values.


PCS believe any insured losses from cyber would be more likely to begin and accumulate after a cessation of the conflict, with a possibility that cyber activity will not be focused upon Ukraine.

Alpha comment

Since the Russian invasion of Ukraine is still on-going, the market is understandably struggling to arrive at early estimates for (re)insurance losses. We have said since the start of the war, that the biggest drivers of the final loss numbers will be (i) the duration of the conflict; (ii) the nature of the resolution of the conflict; (iii) a certain amount of post-conflict litigation between (re)insurers and policy holders on the terms of (re)insurance (particularly on the subject as to whether there have been one or two events); and (iv) the nature of underlying losses and treaty / retrocession cover in place at the time of the outbreak of the war.

It remains our central case that: (i) lawyers will be very busy looking at any policy that could possibly be claimed on, whatever the intention of the policy); (ii) claims at this stage look as if they will fall upon both the 2021 and 2022 years of account, possibly heavier on 2021 than 2022; and (iii) the loss, rather like COVID, will probably fall more heavily on a few syndicates rather than equally across the market, reminding us of the value of a spread portfolio.

We therefore believe that the Ukraine war will impair returns for both the 2021 and 2022 YoAs, but we do not – on information we have to date – believe that it will be a capital event for the market.

There will inevitably be more implications for the (re)insurance industry as data emerge and we will keep members informed of any other developments as soon as we possibly can.

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