Russia’s invasion of Ukraine continues to highlight serious ethical issues in the wider (re)insurance market, most especially in when it comes to the energy sector.
This is hardly surprising, given that Russia is the world’s third-largest producer of oil and second-largest producer of natural gas and thus a major source of income for the sector.
And Russian energy is economically important. In recent years some geographies have become especially vulnerable with regard to their over-dependence on Russian energy supplies – the European Union being a notable example.
Yet this has not prevented several key decisions being made in recent days. This week, for example, the European Commission unveiled proposals –REPowerEU – to boost renewables and quadruple current 2030 targets for green hydrogen supplies.
The EU’s executive arm said it could erase a huge share of its dependency on Russia by tapping new gas supplies, significantly increasing reserves for next winter and accelerating efforts to be more energy efficient.
The proposals are part of a new strategy to cut the EU’s reliance on Russian gas by two-thirds as soon as the end of this year.
President Biden has also announced a ban on importing Russian oil, in a hugely significant decision.
Meanwhile, Western sanctions on Russia have largely excluded the energy sector so far, but does the (re)insurance market really have to wait for these?
Even oil and gas majors have already taken a stance on Russia.
BP is to abandon its nearly 20% stake in Russian state-owned oil and gas company Rosneft; Norway’s Equinor is to begin withdrawing from its joint ventures in Russia, valued at about $1.2 billion; while ExxonMobil is pulling out of a key oil and gas project, Sakhalin-1, and halting any new investments in Russia.
Shell is also leaving its joint venture with state-owned Gazprom and ending its involvement in the now-suspended Nord Stream 2 pipeline built to carry natural gas to Western Europe. The energy giant is also stopping buying Russian oil and natural gas and shutting down its service stations and other operations in Russia.
So, energy underwriters, don’t wait for sanctions to be introduced. Do the decent thing and announce forthwith you will cease to write new Russian energy covers. What’s happening to Ukraine is evil, and you are, one way or another, effectively supporting the war machine by continuing to do business with Russia.
Editor, Emerging Risks