AIG considers cutting insurance for Russia, Ukraine: sources

AIG, one of the world’s largest commercial insurers, is considering dropping Russia and Ukraine coverage to protect itself from the risk of heavy claims as sanctions tighten and the war drags on, an insurance broker and a source familiar with the matter said. the case.

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

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

Reuters was unable to determine whether the potential reduction in coverage would apply to all of AIG’s policies in the countries. The insurer declined to comment.

“What we’re seeing now is underwriters starting to introduce Russian and Ukrainian wording on their policies,” said Meredith Schnur, managing director and leader of US and Canadian cyber brokerage at insurance brokerage Marsh, and he declined to name the insurers.

Brokers like Marsh act as intermediaries between corporate clients and insurers and are sometimes involved in writing policies.

If AIG were to cut coverage for companies and businesses operating in Russia and Ukraine, it would be the first major insurer to do so, which could pave the way for others to do the same.

While Russia has become a no-go zone for many companies due to sanctions imposed in the wake of 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 businesses open.

Local businesses also carry insurance for damage to property, buildings, and vehicles, and for injury or loss of life to employees. Reuters was unable to determine how much of AIG’s business in Russia and Ukraine was focused on domestic companies.

AIG, which reported P&C net written premiums totaling more than $26 billion last year, has operations in Russia, according to its website, and is a major global player in sectors including energy, construction and cybernetics.


Sanctions on Russia are already forcing insurers to withdraw coverage of restricted Russian entities and individuals, while UK and European sanctions on aviation insurance extend beyond individual companies to all Russian companies.

Insurance brokers such as Aon and Willis Towers Watson have frozen their operations in Russia, while reinsurers Munich Re and Swiss Re are among the 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 to go further, adding terms in insurance policies to exclude coverage for Ukraine, Belarus and the Russian and Ukrainian operations of Western companies, say industry sources.

Insurers are concerned about the reputational damage of doing business in Russia and are also concerned about property damage and delayed payments in Ukraine, where the economy has been pulverized by war.

Some policyholders are already struggling to find insurance.

François Malan, risk and compliance director at French engineering firm Eiffage, said last week that he was forced to accept an insurance exclusion for cargo transportation in waters near Ukraine.

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

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

Some insurers are also cutting back on the provision of this type of insurance due to increasing dangers, including being hit by shells or floating mines, marine insurance sources say.

pandemic handbook

Insurers typically add certain types of exclusions to policies exposed to potential conflict, such as during the South Korean Winter Olympics, but they don’t typically exclude entire regions, as in the case of the Ukraine crisis.

The move to exclude areas of risk from its business reflects the behavior of insurers following the COVID-19 pandemic.

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

After raising premium rates as well, many of them reported strong profits in 2021, the second full year of the pandemic. Some industry sources say the losses were smaller than originally anticipated as a result of those actions.

S&P Global estimated last week that commercial insurers’ losses from the conflict between Russia and Ukraine could reach $35 billion.

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

Swiss Re said on Thursday that insurance and reinsurance losses from the invasion are likely to be similar to losses from medium-sized natural catastrophes such as a hurricane.

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