Lloyd’s aims to cancel insurance policies of sanctioned Russian businesses

Insurance policies - Lloyd's of London Building reflected in glass

This move has arrived as the massive marketplace steps back into profitability after pandemic losses.

Lloyd’s of London has announced that it is working with the government of the United Kingdom for the implementation of sanctions against Russian firms due to the war in Ukraine, including cancelling their insurance policies.

Shortly after announcing the return to profit, the largest insurance market in the world sees a tough year ahead.

According to the market, the war in Ukraine will present a “major claim” for the industry as it seeks to cancel insurance policies in order to comply with sanctions against the Russian companies they covered. That said, it still stated that this year would be “manageable”.

Lloyd’s stated that the lines of business that will be most heavily affected by the cancelled coverage due to the sanctions will be marine, aviation, political risk and trade credit. The largest losses are likely to be driven by unrecoverable planes, according to Lloyd’s chair Bruce Carnegie-Brown.

Insurance policies - Cyber Terrorism

Russia passed laws for impounding jets belonging to western organizations. The planes are worth $10 billion and were leased to Aeroflot and other airlines within the country.

The next biggest losses, according to Carnegie-Brown, are expected to be from ships that are stuck in the Black Sea, as well as for the disruption in cereal and agricultural product exports from Ukraine and Russia alike.

Some of the insurance policies expected to see losses are those for state-sponsored cyberterrorism.

According to Carnegie-Brown, it will take around three or four weeks to sift through the claims and calculate more precisely what the losses will look like.

“It’s reasonably complex because there are lots of different lines of insurance that operate here and in fact some lines of insurance get kicked out by war, there are war exclusions, and some get kicked in because there are war covers,” said Carnegie-Brown as quoted in a report in The Guardian about the insurance policy cancellations and expected losses. “On top of that, you’ve got to overlay the sanctions regime so governments themselves are causing the cancellation of insurance as part of the sanctions package against the Russian state.”

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