London market (re)insurers are in talks with the UK Government after it issued a ban on Russian firms accessing UK insurance capacity.
The Treasury announced it is to bring in restrictions which will end access to Russian companies in the aviation or space industry. Campaigners have called for the sanctions to include Russian energy interests.
The move was said to be in response to the invasion of Ukraine by Russia. Firms will be prevented from making use of UK-based insurance or reinsurance services directly or indirectly. The speed of the announcement has left the London market scrambling to obtain more information including whether the plan is to extend the scope of the ban to other industries and companies.
It comes as the UK Government is locked in a bitter war of words with the Russian space agency which has sized 36 satellites, which form part of the OneWeb project saying it will not release or launch the satellites until the government disposes of its shares in the project.
“These further economic sanctions will limit the benefits Russian entities receive from their access to the global insurance and reinsurance market,” said the Treasury in a statement. “Through Lloyd’s and the London market, the UK is a world leader in these sectors of the global insurance market. In taking such action, the UK is demonstrating its commitment to apply severe economic sanctions in response to Russia’s invasion of Ukraine.
“The UK Government will bring in legislation to prohibit UK based insurance and reinsurance providers from undertaking financial transactions connected with a Russian entity or for use in Russia. Further details of the legislation will be available in due course. Coupled with similar actions by the EU, this move further isolates Russia’s economy from the international financial system.”
The market is said to be seeking more details as to the full implications of the new sanctions.
A spokesman for the International Underwriting Association (IUA) said that the IUA was in contact with the Treasury to seek greater clarification.
“The IUA provides a comprehensive sanctions information service to its members, publishing regular updates on new developments and maintaining a detailed online database,” he added. “Companies have access to country by country international sanctions pages on the IUA website that list current measures in put in place by the UK, US, EU and United Nations.
“The fast-moving situation with regard to Russia and Ukraine has necessitated multiple updates in recent days and the IUA is continuing to monitor further announcements on new sanctions against Russia. The latest statement from HM Treasury indicates an intention to bring in legislation to prohibit UK aviation and space insurers and reinsurers from undertaking financial transactions connected with Russian entities. We await further details of this legislation which will be communicated to IUA companies, enabling them to continue ensuring full compliance with all relevant measures.”
Patrick Tiernan, Lloyd’s Chief of Markets said they were talking to the regulators and the Government and would implement the sanctions “at pace”.
“We continue to monitor the unfolding situation in Ukraine and our thoughts are first and foremost with those people directly affected,” he said. “We are in regular communications with the UK government and international regulators and are working closely with the Lloyd’s market to uphold the implementation, at pace, of sanctions applied by governments around the world. In addition, Lloyd’s has donated to the British Red Cross Ukraine Crisis Appeal to support humanitarian relief efforts in the region.”
Campaigners have called for the UK government to go further and extend the ban to Russian energy companies.
Lindsay Keenan, European Coordinator of Insure Our Future, said cutting off Russian energy revenues by denying cover would have a greater impact.
“By blocking the UK insurance market from Russian aviation and space companies, the UK government has set an important precedent,” he added. “However, Putin’s war on Ukraine is mainly bankrolled by Russia’s fossil fuel exports, and London is the global centre for energy insurance. The UK government needs to immediately exclude Russian energy companies from Lloyd’s and the London insurance market if it really wants to stop underwriting the war on Ukraine.”
“The UK government’s action has highlighted the important role of the insurance sector, and other governments should also sanction the provision of insurance for Russian companies. Insurance and reinsurance companies, including in the UK (Lloyd’s of London), France (AXA & SCOR), Germany (Allianz & Munich re), Switzerland (Zurich & Swiss Re) and the US (AIG, Chubb & Liberty Mutual), need to stop underwriting Russia’s war on Ukraine by stopping insuring Russian energy companies.”