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Worldwide sanctions on Russia impacting heavily on insurance market

25 April 2022

Russia’s invasion of Ukraine has triggered wide ranging sanctions including a ban on the provision of insurance and reinsurance services.

Swiss Re and Munich Re, which are leaders in the reinsurance market worldwide, have already announced their decision not to renew contracts and to suspend new business in Russian territory.

Experts warn that the sanctions imposed by the United Kingdom, the world leader in the global (re)insurance market, will have a significant impact, particularly in the reinsurance market for the aviation, maritime and energy sectors.

The warning comes after the European Union released details of its fifth package of sanctions on Russia with 216 individuals and 18 entities added to EUs asset freeze list.

The wide ranging sanctions imposed by the EU on exports to Russia extends to all insurance associated with those exports.

An added complication is that policies issued before the war with Ukraine started may involve limitations and exclusions generally applicable in war situations and in claims involving sanctioned States.

Helen Dalziel, director of public policy at the International Underwriting Association of London, says the insurance landscape is having to react to significant change: "The unusual circumstance is the rapidity — the changing every day of the number and amount of entities and sanctions that are being brought forth."

Lloyd’s of London have reported aviation, marine, trade credit and political risk are the lines of business most affected.

The Russian Government has responded to the sanction by initiating a ban on their national insurers from entering into contracts with insurers, reinsurers and insurance brokers from hostile states and insurers, reinsurers and insurance brokers controlled by residents of hostile states.

The list of hostile states includes, among others, United States, European Union countries, United Kingdom, Canada, Japan and Australia. These measures will also apply to domestic insurers, reinsurers and insurance brokers controlled by foreign investors.

As a result of the expanded sanctions there are growing fears the aeronautical insurance business may be facing record losses as a result of defaults on aircraft leases involving Russian-based airlines.

In early March, Russia’s aerospace and aviation sectors were blocked from accessing insurance through the UK insurance market.

The rise in defaults may require a response from the globalinsurance and reinsurance market as operational lessors will face great difficulties in recovering ownership of the aircraft leased to Russian operators.

Updated European Union Sanctions imposed on April 8:

The EU issued two new Regulations as part of a fifth package The list of individuals include Oleg Deparska who is the owner of Sweden’s only aluminium plant Kubal

The list of entities include four banks; Otkritie FC Bank, Novikombank, Sovcombank, VTB Bank. The asset freeze list now comprises of 1110 individuals and 83 entities

The sanctions also include:

· Port access - access to ports in EU is blocked for vessels registered in Russia. Notably, Swedish Dockworkers Association has already imposed a wider ban against its member to work vessels that are owned or controlled by Russians or transporting Russian cargo or transiting to or from Russia.

· Import – a wide variety of products listed such as wood products, minerals, cement, furniture, potassium chloride and cruise ships that generate significant revenue to Russia is prohibited

· Import - coal and other solid fossil fuels listed is prohibited

· Export - various chemicals, agents, fabrics and appliances that could contribute in particular to the enhancement of Russian industrial capacities is prohibited

· Road transports - road transport companies established in Russia are prohibited to transport goods by road within EU, including transit

· Various prohibitions regarding cash deposits, crypto assets, transferable securities, bank notes public contracts, financial support and access to business addresses are introduced.

The US sanctions updated on April 6;

· New investment in Russian by a United States person, wherever located is prohibited

· The exportation, re-exportation, sale, or supply, directly or indirectly, from the United States, or by a United States person, wherever located, of any category of services as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, to any person located in the Russian Federation; and

UK sanctions updated on April 6:

· Asset freezes against Sberbank and Credit Bank of Moscow

· A ban on all new outward investment to Russia.

· The export of key oil refining equipment and catalysts will be banned

· A ban on imports of iron and steel products and export of UK’s quantum and advanced material technologies

· Addition of eight oligarchs to the asset freeze list

W Denis place insurance around the world and have direct access to Lloyd’s of London, if you wish to discuss your insurance requirements, please visit or contact Vida Jarašiūnaitė or Mark Dutton

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