The UK government has imposed fresh sanctions targeting Russia’s aviation and space industry, meaning that businesses cannot access the UK insurance sector.
The measures, hauled in in response to Russia’s invasion of Ukraine, will “severely limit” access to the global insurance and reinsurance market, the UK government announced today.
The European Union (EU) is expected to follow with similar actions to limit what Russian businesses can access on the global stage.
“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 government said in a statement.
London’s insurance market is the world’s largest commercial and speciality insurance centre.
Patrick Tiernan, Lloyd’s chief of markets said: “We continue to monitor the unfolding situation in Ukraine and our thoughts are first and foremost with those people directly affected. 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.”
The UK government imposed a second round of sanctions on Russia just yesterday, as well as fresh restrictions on Belarus, which has joined Russia in the invasion of neighbouring Ukraine.
The UK became the first country to ban all Russian ships from entering UK ports.
New measures hauled in on Wednesday by foreign secretary Liz Truss prohibit UK individuals and entities from providing financial services to the Central Bank of the Russian Federation, as well as the Ministry of Finance and National Wealth Fund.
Russia’s state-owned sovereign wealth fund and its chief executive have also been sanctioned, which means the majority of Russia’s financial system is now covered by UK sanctions.
“The plethora of new UK – and other – Russia sanctions over the past few days have led to a huge number of enquiries from clients about the effect on their contracts with Russian counterparties,” Radcliffe Chambers QC Shantanu Majumdar told City A.M.
“It is still early days in terms of assessing the detailed effect of the various sanctions, but whether force majeure and even sanctions clauses help, depends on their precise wording. Contracts containing neither have to resort to, usually difficult, arguments about illegality under the general law,” he explained.
“Perhaps the most immediate effect is the difficulty of making or receiving payments even in sectors which are not subject to sanctions. This is because of restrictions imposed on various Russian banks, including access to Swift, but also risk-averse international banks which question and delay even legitimate payments. It is becoming like dealing with Iran.”