AIG, one of the world’s biggest commercial insurers, is considering cutting cover for Russia and Ukraine, to shield itself from the risk of hefty claims as sanctions ratchet up and the war drags on, reported Reuters.
An insurance broker and a source familiar with the matter told the news agency that AIG is looking at adding exclusion clauses to policies for businesses operating in the region across a range of policies.
If AIG were to cut back cover for businesses and companies operating in Russia and Ukraine it would be the first major insurer to do so, potentially paving the way for others to follow suit.
Other major insurers are also looking to exclude Russia, Ukraine and even Belarus from a range of policies, the sources said, citing some insurers and policyholders.
“What we are now seeing are the underwriters starting to introduce Russia, Ukraine wording into their policies,” said Ms Meredith Schnur, managing director, US and Canada cyber brokerage leader at insurance broker Marsh, declining to name the insurers.
Sanctions on Russia are already forcing insurers to pull back from coverage of restricted Russian entities and individuals, while UK and European sanctions on aviation insurance extend beyond individual companies to all Russian firms.
Insurance brokers such as Aon and Willis Towers Watson have frozen operations in Russia, while reinsurers Munich Re and Swiss Re are among companies that have said they will not write new business in the country, whether potential policyholders are sanctioned or not.
But AIG and other underwriters are looking at going further, adding wordings into insurance policies to exclude cover for Ukraine, Belarus and the Russian and Ukrainian operations of Western businesses, industry sources say.
Insurers are concerned about the reputational damage of doing business in Russia and they are also worried about property damage and delayed payments in Ukraine, where the economy has been pulverised by the war.
