Storms, high winds, fire hazards and equipment failure are many of the typical risks involved with the solar power industry. For the Dagda solar farm in rural Latvia, there’s now another one: drones.
The owner of the farm, Sunly, has insured Dagda and dozens of other large parks in Estonia, Latvia, Lithuania and Poland worth €600 million ($670 million) in case of any spillover from the war in Ukraine. The Tallinn-based company wanted to protect its assets and reassure its investors, who have been more careful about placing their money in the region.
“We see this as a real business risk,” said Peeter Raudsik, Sunly’s head of regulation. “Several big banks are demanding terrorism and sabotage insurance as the standard.”
From an apartment building in Romania to a parked car in Lithuania, drones from the war in Ukraine have increasingly been inflicting damage along NATO’s eastern flank this year. The heightened risk is now spawning a small, but growing area of the insurance business.
Many insurers in the region, particularly in the Baltics and Poland, have begun offering political violence or war risk cover. Incidents linked to Russia’s war in Ukraine are often followed by a spike in inquiries from businesses and homeowners nervous about protecting their property.
“We have a bit of dark humor in the insurance industry: We say that the best advertisement for insurance is a neighbor’s house on fire,” said Simonas Lisauskas, chief executive officer of Lietuvos Draudimas, the largest insurer in Lithuania. “Following events like these, we definitely observe a surge in client interest.”
Standard policies usually have a conflict exemption clause. In a high-profile case in July, the UK’s High Court decided that insurers were not liable for damages from the Nord Stream gas pipeline explosion in 2022 because they were a “consequence of war” and therefore exempt.
Critical national infrastructure — such as power plants, airports, data centers and utilities — have been among the biggest entities seeking more comprehensive cover. Then there are manufacturers, shopping centers and logistics warehouses. Additionally, homeowners, hotels, churches and educational institutions — including college Vilniaus Kolegija — have taken out policies.
Lietuvos Draudimas has signed more than 100 insurance contracts with businesses since May, said Lisauskas. One of them was Swedish telecommunications operator Telia, which last month insured its Lithuanian infrastructure, including data centers, for up to €50 million. The terms weren’t disclosed.
The Vilnius and Riga airports are also assessing new options for insurance against drones and geopolitical risks. So is a major Baltic seaport that declined to be identified publicly. A spokesperson for Riga Airport said the policy it currently holds covers risks related to terrorism and sabotage.
Customers are asking for quotes and trying to understand what kind of premium they can expect. Homes can get protection for as little as an extra annual cost of €10, but corporate premiums, which are calculated based on asset value, can reach tens of thousands of euros annually.
“Risk awareness and demand is spreading across the region,” said Konrad Krasa, head of energy, power and mining at Warsaw-based insurance broker GrECo Poland. Krasa said he has seen an uptick in requests for insurance across European countries bordering Russia, Belarus and Ukraine. Aon, a global broker, also said it received several dozen war risk insurance queries from the region in the last three months.
When Russia launched its full-scale invasion of Ukraine in 2022, international insurers fled the market. But reinsurers have since returned, with the help of institutions such as the European Bank for Reconstruction and Development and the U.S. International Development Finance Corporation.
Until recently, the market standard was that insured assets needed to be at least 100 kilometers (62 miles) from the war’s front line. The EBRD has been able to halve that.
European officials have warned repeatedly that the region’s security could get worse as Russia’s invasion of Ukraine drags on and the spillover from the conflict increases.
The chimney of a power plant in Estonia and an empty oil storage unit in Latvia not far from the Dagda solar farm were hit earlier this year when Ukrainian military drones crossed the border from Russia. A drone also crashed in a field near a home in southern Estonia.
Estonian insurer Seesam, owned by Vienna Insurance Group, said it’s been offering war risk coverage since the beginning of July, responding to growing demand. Its customers include manufacturers, apartment associations, hotels and shops. By September, the insurer had signed three times more residential customers than in August.
The anxiety extends to homeowners as well. Swedish lender Swedbank has expanded its homeowner insurance coverage in the three Baltic countries to include war and political conflict. It applied automatically to existing customers, but initially for only six months.
Seesam is advertising its new coverage in Estonia with the idea that you can’t move your home but you can take action. “Interest in war risks protection increased right after the drones began straying into Estonia,” Dagmar Gilden, Seesam’s home insurance product leader, said by email. “Every new incident has prompted customers to explore their options.”
Photograph: Riga International Airport; photo credit: Andrey Rudakov/Bloomberg
Was this article valuable?
Here are more articles you may enjoy.
Miami Beach Buildings Sinking at Different Rates, Due to Construction, Study Finds 
Georgia, Florida Insurers Facing New Scrutiny, Regulations After Election 
Yellow Furball Mascot Liberty Biberty Sparks ‘Beautiful’ Protest. Seriously? 
Private Jet’s Pilot Reported Turbulence Before Florida Crash 
