The impact of sanctions on insurance policies
Against the backdrop of the war in Ukraine, this advisory is intended to provide our customers with a brief roundup update on developments we have seen in the insurance rules and policy coverages of P&I clubs in response to the heightened environment surrounding sanctions.
The complexity of international sanctions regimes is impacting several global industries. In the maritime industry, many insurers and underwriters are seeking to limit sanctions risks through the implementation of programs that drive compliance with global sanctions regimes.
Performing due diligence
In an online advisory, The Swedish Club warns: “Members are strongly advised to perform due diligence before entering into any contracts that may expose themselves and/or the Club and its reinsurers to sanctions.” The Club further warns: “The Club does not perform due diligence checks for Members on an intended trade as there may be a conflict of interest between the Club and its Members due to the serious effects any sanctions risks may have on insurance cover.”
The Club’s advisory further states that, in line with the position of other P&I Clubs, “all Members are under a duty to take steps to satisfy the legality of their own actions.”
Otherwise, the Club warns that “where a Member has exposed or may expose the Club to the risk of being or becoming subject to a sanction, prohibition or other adverse action under certain sanctions regimes, the Club may terminate the period of insurance on such notice as the Club may decide.”