EXCLUSIVE AIG plans to cut insurance for Russia and Ukraine – sources


LONDON, April 8 (Reuters) – AIG (AIG.N), one of the world’s largest commercial insurers, is considering reducing cover for Russia and Ukraine, to protect itself from the risk of large claims as the sanctions are intensifying and the war drags on, said an insurance broker and a source familiar with the matter.

AIG is considering adding exclusion clauses to policies for businesses operating in the region through a range of policies, according to the two sources who declined to be identified.

Other major insurers are also seeking to exclude Russia, Ukraine and even Belarus from a range of policies, the sources said, citing some insurers and policyholders.

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Reuters could not determine whether the potential reduction in coverage would apply to all AIG policies in the countries. The insurer declined to comment.

“What we’re seeing now is underwriters starting to introduce Russian and Ukrainian language into their policies,” said Meredith Schnur, Managing Director, Head of Online Brokerage U.S. and Canada. at the insurance broker Marsh, refusing to name the insurers.

Brokers such as Marsh act as intermediaries between corporate clients and insurers, and sometimes intervene in the design of policies.

If AIG were to reduce coverage for businesses and corporations operating in Russia and Ukraine, it would be the first major insurer to do so, potentially paving the way for others.

While Russia has become a no-go zone for many companies due to sanctions imposed following Moscow’s invasion of Ukraine, some multinationals continue to do business there and in Ukraine in sectors ranging from agriculture to energy. They need insurance to keep their business open.

Local businesses also depend on insurance for damage to property, buildings and vehicles and for the injury or death of employees. Reuters could not determine how much of AIG’s business in Russia and Ukraine was focused on domestic companies.

AIG, which had net written premiums in non-life insurance totaling more than $26 billion last year, has a presence in Russia, according to its website, and is a major global player in sectors such as energy, construction and cyber.


Sanctions on Russia are already forcing insurers to withdraw cover for restricted Russian entities and individuals, while UK and EU sanctions on aviation insurance extend beyond sole proprietorships to all Russian businesses. Read more

Insurance brokers such as Aon (AON.N) and Willis Towers Watson have frozen their operations in Russia, while reinsurers Munich Re (MUVGn.DE) and Swiss Re (SRENH.S) are among the companies that have declared that they would not write new business in Russia. the country, whether the potential policyholders are penalized or not. Read more

But AIG and other underwriters plan to go further, adding language in insurance policies to exclude coverage for Ukraine, Belarus and Western companies’ Russian and Ukrainian operations, sources say. sector.

Insurers are worried about reputational damage from doing business in Russia and they are also worried about property damage and late payments in Ukraine, where the economy has been shattered by war.

Some policyholders are already struggling to find insurance.

Francois Malan, director of risk and compliance at French engineering firm Eiffage, said last week that he had been forced to accept an insurance exclusion for the transport of goods in waters near the Ukraine.

“It wasn’t negotiable, it wasn’t a question of price – it wasn’t covered,” he said.

Ships sailing in the waters around the Black Sea and the Sea of ​​Azov, which include the Ukrainian coast, must carry additional war risk insurance, which means paying a separate premium.

Some insurers are also reducing the provision of this type of insurance due to increasing risks, including being hit by projectiles or floating mines, according to marine insurance sources.


Insurers typically add certain types of exclusions in policies exposed to potential conflict, such as during the Winter Olympics in South Korea, but typically do not exclude entire regions, as in the case of the Ukraine crisis.

The decision to exclude risk areas from their business reflects the behavior of insurers after the COVID-19 pandemic.

Faced with losses estimated at $100 billion, insurers rushed to exclude first COVID-19 and then all pandemics from policies.

After also raising premium rates, many of them reported strong profits in 2021, the second full year of the pandemic. Some industry sources say losses have been lower than originally expected as a result of these actions.

S&P Global estimated last week that commercial insurers’ losses from the Russian-Ukrainian conflict could total up to $35 billion. Read more

S&P said the insurance sectors likely to be most affected were aviation, trade credit, political risks such as nationalization, cyber, political violence and maritime warfare.

Swiss Re said Thursday that insurance and reinsurance losses from the invasion were likely to be roughly equivalent to those from a medium-sized natural disaster, such as a hurricane.

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Additional reporting by Jonathan Saul; Editing by Emelia Sithole-Matarise

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