BUSINESS
War! What Is It Good For?
HELPING YOUR BUSINESS AVOID INSURANCE COVERAGE BATTLES FOR LOSSES FLOWING FROM THE RUSSO-UKRAINIAN CONFLICT By: William Edward McMichael
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Businesses should treat claims arising out of the Russo-Ukrainian Conflict with extreme care, lest they lose policy benefits to which they may be entitled 50
SHALE MAGAZINE JULY/AUGUST 2022
from an illegitimate Western government. How should we regard losses flowing from economic sanctions imposed against Russia by nations who believe the conflict to be a “war,” but are not themselves involved in the physical fighting? What about when Ukrainian civilians fight back? What happens when an event looks like a “war,” but may not fall within its special
NATTAKORN/STOCK.ADOBE.COM
s the conflict in Ukraine rages on, media outlets continue to report Western businesses pulling out of eastern Europe. Undoubtedly, many businesses will seek insurance coverage for losses flowing from the conflict. After all, is this not what insurance is designed to cover? Sudden, unexpected events that cause significant losses? As risk managers and insurers alike review these claims, one may be tempted to dismiss attempts to obtain coverage for losses flowing from the conflict as “desperate.” Indeed, nearly all modern insurance policies include some version of a “War Exclusion,” a standard provision that excludes coverage for losses arising out of “war” or “warlike action.” However, the path to recovery may not be as bleak as one might anticipate. Businesses should treat claims arising out of the Russo-Ukrainian Conflict with extreme care, lest they lose policy benefits to which they may be entitled. The insurance industry traditionally defined “war” to mean a formal conflict between entities that bore indicia of sovereign nations. However, modern understandings of “war” are not as restrictive. For example, the United States spent two decades “at war” in the Middle East, but never was in conflict with the nations where it waged its conflict (i.e., the “War on Terror.”) Consider also that Russia’s official position in the early stages of the conflict was that it was not “at war,” but rather engaged in a targeted mission to liberate ethnic Russians
