Recent announcements from the Biden Administration regarding increased military support to Ukraine and the deployment of American military contractors could significantly impact your operations and risk profile. These measures, designed to bolster Ukraine’s defense capabilities amidst ongoing conflict, involve substantial military aid and the strategic deployment of U.S. contractors to provide logistical and technical support.
During the recent NATO summit, President Biden announced additional air defense aid for Ukraine, including agreements with four other countries to enhance Ukraine’s defense capabilities. This package includes advanced air defense systems and support from Japan, Canada, Germany, France, the United Kingdom and Italy. The aid aims to strengthen Ukraine's ability to defend against aerial attacks and improve its overall defense infrastructure.
This evolving situation underscores the need for robust risk management and comprehensive insurance coverage. As your trusted advisors, WTW is here to ensure you are well-informed and prepared to navigate these changes, leveraging our expertise to help you mitigate risks and maintain operational integrity.
Key developments
- Increased military assistance to Ukraine: The Biden Administration has committed substantial new security assistance to Ukraine, including $225 million worth of equipment such as air defense systems, armored vehicles and anti-tank weapons. This aid aims to bolster Ukraine's defense capabilities amid intensified Russian offensives along the eastern border.
- The recent NATO summit announcement includes further air defense aid to Ukraine, highlighting the ongoing commitment and the necessity for enhanced defense measures. Deployment of American military contractors: The administration is facilitating the deployment of American military contractors to support operations in Ukraine. This move is designed to enhance logistical and technical support for the Ukrainian military.
Critical implications for your operations
- Hardening market conditions: Deploying contractors to an active conflict zone may lead to a hardening market for your insurance policies including but not limited to Defense Base Act (DBA), liability, aviation, marine, A&H, property and others. Insurers might become more cautious, and some may even withdraw from offering coverage due to heightened exposure.
- Risk assessment adjustments: Enhanced safety measures and detailed risk management plans will be critical to securing and maintaining coverage.
- Premium increases and policy restrictions: Expect potential increases in premiums and more stringent policy conditions.
- Regulatory compliance: Adhering to federal regulations, including FAR and DFARS, which may be updated in response to these developments, will be crucial.
- Medical evacuation plans: Having a strong medical evacuation plan is essential due to the challenges providers may face in accessing the conflict zone.
What you can do
- Reassess risk profiles: Reevaluate your risk profiles if you are involved in Ukraine operations to ensure comprehensive coverage.
- This includes conducting thorough assessments of current and potential exposures, understanding the specific risks associated with the conflict zone, and identifying any gaps in existing insurance policies.
- Collaborate with WTW resources to tailor risk management strategies that address the unique challenges of operating in high-risk areas.
- Prepare for premium increases: Be prepared for potential premium increases and policy changes. Consider proactive measures to mitigate risks.
- Consider taking proactive steps such as enhancing your operational safety measures, conducting comprehensive risk assessments, and maintaining detailed documentation of your risk management practices.
- Work with WTW to explore a range of coverage options and tailor insurance solutions that best fit your specific needs and circumstances.
- Ensure regulatory compliance: Stay updated on federal regulations and ensure compliance to maintain coverage and operational integrity.
- This includes regularly reviewing updates to FAR and DFARS clauses, as well as any new directives from relevant government agencies.
- Work closely with WTW to receive timely updates and guidance on compliance matters, ensuring your operations adhere to the latest standards and requirements.
- Develop medical evacuation plans: Implement robust medical evacuation plans to ensure prompt and safe medical care for contractors.
- This includes identifying reliable medical evacuation providers, establishing clear protocols for emergency situations, and ensuring that all personnel are trained on these procedures.
- Additionally, it’s important to have contingency plans in place for various scenarios, such as different levels of conflict intensity or access restrictions.
- Collaborate with WTW to develop comprehensive evacuation strategies that account for the unique challenges of operating in high-risk areas, ensuring that your contractors receive timely and effective medical support when needed.
How we can help
- Proactive client communication: We will keep you informed about the potential impact on your DBA policies and the importance of comprehensive risk management strategies.
- This includes providing timely updates on regulatory changes, market conditions, and emerging risks. Our goal is to ensure you have all the information needed to make informed decisions and adjust your strategies accordingly.
- By maintaining open lines of communication, we can help you anticipate challenges and leverage opportunities to optimize your risk management practices. Partner with WTW to stay ahead of industry developments and ensure your operations remain resilient and compliant.
- Thorough policy review: Our team will conduct detailed reviews of your existing policies to ensure they align with the current risk environment and your operations in Ukraine.
- This includes assessing coverage limits, exclusions, and conditions to ensure they meet your specific needs and address potential gaps.
- We will work to tailor your insurance solutions to the evolving landscape and maintain robust coverage for your operations.
- Engagement with underwriters: We will engage with underwriters early to discuss potential changes and explore alternative coverage options if necessary.
- This proactive approach allows us to negotiate the best possible terms and ensure your coverage remains comprehensive and aligned with the evolving risk landscape.
- By understanding your specific needs and the challenges posed by operations in Ukraine, we can advocate for customized solutions that address your unique risks.
- Working closely with underwriters, WTW aims to secure favorable policy conditions and identify opportunities for enhanced protection, ensuring your operations are well-supported by your insurance coverage.
- Enhanced risk mitigation: We will advise you on implementing enhanced safety protocols, including robust medical evacuation plans and emergency response plans, to reduce exposure and demonstrate proactive risk management to insurers.
- This includes developing robust medical evacuation plans and comprehensive emergency response plans tailored to the specific risks of your operations in Ukraine.
- WTW will work with you to establish clear procedures and training programs, ensuring your team is well-prepared for any contingencies. Demonstrating a proactive approach to risk management can also help secure more favorable terms from insurers, reflecting your commitment to maintaining high safety standards.
Leveraging our Risk Assessment Contract Review Program
We offer an advanced Risk Assessment Contract Review Program as part of our unique services for government contracting clients. This program is designed to help you define favorable and unfavorable FAR/DFAR clauses, decide on alternative coverage, and manage risk transfers effectively. We believe this tool can help our clients navigate opportunities while maximizing their protections. Key features of our program include:
- Comprehensive contract analysis: Identify and analyze key FAR/DFAR clauses that may impact your operations, ensuring you understand both the benefits and risks associated with each clause.
- Insurance exposure assessment: Evaluate various aspects of insurance exposure, including workers compensation/DBA, aviation liability, construction operations, engineering and design operations, environmental operations, medical liability and other professional liabilities. This helps in tailoring insurance solutions that meet your specific needs and address potential gaps.
- Coverage optimization: Recommend alternative coverage options tailored to your specific needs, helping you achieve optimal insurance protection.
- Risk transfer strategies: Develop effective risk transfer strategies to mitigate potential liabilities and enhance your overall risk management framework.
- Regulatory compliance assurance: Ensure your contracts and operations comply with federal regulations, minimizing the risk of non-compliance and associated penalties.
- Detailed reporting: Provide detailed reports and actionable insights based on your unique contract requirements and operational risks.
- Ongoing support: Offer continuous support and updates as regulations and market conditions evolve, keeping your risk management strategies current and effective.
- Expert consultation: Access to WTW's team of experienced government contracting industry specialists or personalized advice and guidance on complex contract and risk management issues.
Disclaimer
Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
