A number of cargo underwriters are moving to cancel and avoid coverage on Russian exports and consignments coming into both Russia and Ukraine, according to reports from Lloyd’s List.
Sources at the publication say underwriters are concerned about reputational risks and potential difficulties in paying out on insured claims.
As such, the market is quickly looking to avoid any business that could be seen as supporting the war from either side.
“Our first priority is to protect our business and most underwriters have therefore cancelled cover to Russia, Ukraine and the surrounding areas,” one leading underwriter told Lloyd’s List.
“Even if an insured claim occurs, we would have to make very sure that we are not contravening any sanctions at payment stage,” they added.
“This is not just a sanctions matter but also a safeguarding matter,” concurred a representative from MIS Marine, which specialises in marine assurance vetting procedures.
“There is more to it than just geopolitical sanctions, such as crew safety and a moral obligation to act.”
So far, a number of major insurance and reinsurance companies have already made the decision to withdraw their business from Russia following its invasion of Ukraine, including broking giants Marsh McLennan, Aon and WTW.
Fitch and AM Best have also downgraded the ratings of Russian re/insurers, having also moved Russia to a bottom country risk tier, owing to the heightened geopolitical, economic and financial system risk in the country.
AM Best is expecting Western re/insurers to face significant exposure to the Russia-Ukraine crisis as well, while analysts at KBRA have warned of “pain” for insurers and DBRS says the invasion will weigh on the outlook of the P&C sector.
And recent reports suggest the aviation market could be at risk of huge losses due to the 500+ Western aircraft that remain stranded in Russia since airspaces have closed off, which could be nationalised and claimed by the state.
