Russian aviation and space companies are to be blocked from accessing UK insurance services in a move which could be widened to include Russian shipping firms.
The Treasury Department is currently drawing up the legislation, which has yet to be finalised, as it steps up sanctions against Russia for its invasion of Ukraine.
So far the UK government has said the latest insurance sanctions will apply to the Russian aviation and space industry.
In a statement the UK government said it 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”.
However, as with other financial services sanctions the scope could easily be widened to include other lines of specialty insurance, including marine insurance. The UK already has Russian shipping in its sights after it banned its vessels from ports.
The possible inclusion of shipping in the insurance sanctions would have a significant impact in Russian shipping companies ability to trade around the world.
The London market, which is made up of both the Lloyd’s of London and London company insurance market, is one of the world’s largest providers of marine hull and machinery, war risk and marine liability insurance to the shipping industry.
Most of the leading protection and indemnity insurers are also based in the UK and the International Group’s of P&I Clubs’ reinsurance policy is placed mainly in London. Under international maritime conventions P&I cover is mandatory.
A broadening of insurance sanctions would also have significant repercussions beyond the UK, as the London market is a major provider of reinsurance to global marine insurance providers.
TradeWinds earlier reported how P&I clubs have already started to withdraw cover from Russian shipping companies which have been listed under international sanctions.