Ukraine crisis creates supply chain pressure similar to COVID

The head of forensic accounting services at loss adjusting group Crawford and Company has warned that the implications of the Russian invasion of Ukraine will have a similar impact on the insurance sector and its supply chain as the COVID pandemic.

In an interview with Emerging Risks, Sarah Baker, said the potential disruption to the supply chain would heap further pressure on claims and with it the response from insurers.

It comes as UK and European car makers have warned there is now a severe shortage of metal which is halting the manufacture of vital parts and with it the vehicles themselves. The cost of vita metals has also soared.

Aluminium and palladium both hit record highs on Monday while nickel, which is also used to make stainless steel, broke the $100,000-a-tonne barrier for the first time ever on Tuesday.

“We are likely to see an impact on new and existing claims, given the disruption in materials in the UK and global supply chains which have been caused but he situation in the Ukraine,” she explained. “The pressure on reinstatements is growing both in in terms of the time they will take to complete or the costs of the materials to complete them.”

Baker said insurers now face the challenges of the extended time for reinstatement, and the lengthening business interruption recovery periods.

“What we are seeing with regard to the effect on claims is similar to that which we witnessed during the pandemic,” added Baker. “Insurers are being challenged to respond to the extended period it will take for reinstatements and the additional costs this may well involve.

“We are seeing an increasing struggle to get materials and with it has come higher costs. There are growing examples of suppliers providing definitive deadlines in terms of how long they are prepared to hold the price of materials in a quote. Insurers have to accept the quote in the specified time period or in effect they have to start again.”

She added with the rising costs of materials, and with it the value of claims, businesses are now facing a challenge around the adequacy of the sums insured within their policies.

The hope for the market is that the lessons which were learned during the pandemic can be leveraged during the current crisis, with the role of the loss adjuster rising in value.

“The challenges we face increasingly call for innovative solutions,” added Baker. “Loss adjusters can take examples and examples of what has worked in different claims and with other insurers to structure solutions, and we are seeing the demand for advice and expertise increase as conditions become more difficult.”

However, she warned that the ongoing conflict will ensure there is little likelihood of the supply chain crisis easing in the short term.

“Unfortunately this is just the start,” she explained. “While the situation is still very fluid, depending on what happens we have to factor in the huge amount of rebuilding that will be required in Ukraine.

“During COVID it was very much a logistical issue, with the inability for the movement of goods and services. While the cost of and the time taken to deliver materials are the challenges currently faced in the supply chain, when the rebuilding of Ukraine commences it may well be that the pressure on materials is such that it will be a case of the basic availability of materials which is the biggest pressure. The industry will need to create fresh solutions.”

It comes as UK and European car makers have warned there is now a severe shortage of metal which is halting the manufacture of vital parts and with it the vehicles themselves. The cost of vita metals has also soared.

Follow us on twitter: @risksEmerging

Russia's Gazprom continues shipping gas to Europe via Ukraine https://www.reuters.com/business/energy/russias-gazprom-continues-shipping-gas-europe-via-ukraine-2022-05-29/

Colombians head to polls in divisive presidential election http://reut.rs/38wovlQ

The Conservatives' plan is becoming clearer by the day.

To turn the UK over to the World Economic Forum.

#Quantum #teleportation achieved between non-adjacent network nodes
By #MichaelIrving

http://bit.ly/3lUzQPE

#QuantumComputing

@BetaMoroney @FrRonconi @mvollmer1 @SpirosMargaris @psb_dc @andi_staub @WhiteheartVic @gerald_bader @enricomolinari @RagusoSergio @PawlowskiMario

How Hong Kong's Omicron crisis 'took just 10 days for everyone to be infected’ https://bbc.in/38rR5oi

Yeah... I found a vuln that's beyond me. I need to read into detail about this one, and see.

#Ethicalhacking #ethicalhacker

IBM’s New Partnerships To Address Cybersecurity Talent Shortages Also Drive Social Impact https://buff.ly/3wTPxeY #cybersecurity #ciso #technology via @winklhawk

Android apps with millions of downloads exposed to high-severity vulnerabilities
#MobileSecurity #AndroidSecurity by @Microsoft
http://www.microsoft.com/security/blog/2022/05/27/android-apps-with-millions-of-downloads-exposed-to-high-severity-vulnerabilities/

Load More...
SHARE: