Russian insurance firms forbidden from transacting with 'unfriendly countries'
The Russian law discontinues insurance transactions with 'unfriendly countries,' including the U.S., Canada, U.K and the EU, until Dec 31, 2022.
In what seems to be in direct response to a number of insurers and reinsurers taking steps to cut ties with Russia, the Russian Parliament has enacted a new law prohibiting insurers in the country from completing transactions with insurers, reinsurers and brokers from what it calls “unfriendly states.” The legislative amendment was signed by President Vladimir Putin and is in effect until Dec. 31, 2022.
The “unfriendly states” include the EU, U.K., Ukraine, Montenegro, U.S., Canada, Japan, Switzerland, Albania, Andorra, Iceland, Liechtenstein, Monaco, Norway, San Marino, North Macedonia, Japan, South Korea, Australia, Micronesia, New Zealand, Singapore and Taiwan. No risks in Russia may be ceded to carriers in any of these countries.
Additionally, the Bank of Russia directors have the authority to determine the obligations that are not subject to transfer by a cedent to a national reinsurer for reinsurance protection.
Earlier this month the Bank of Russia increased the capital for Russian National Reinsurance Co. from $600 million-$2.57 billion to expand the volume of available capacity, enabling domestic carriers to reinsure more risks within Russia.
Swiss Re ends new business, renewals in Russia
The new law was announced the same day that Swiss Re, one of the largest reinsurers in the world, announced that it was the latest global carrier to cease new and renewal business in Russia amid the war in Ukraine. Since then Munich Re has also announced that it will not renew existing contracts in Russia and Belarus, and suspend all new insurance business and financial investments in the country.
Swiss Re, Allianz and Munich Re have joined a large and growing list of reinsurers and brokers that have decided to cut ties with the country, including Zurich, Marsh McLennan, Willis Towers Watson, and Aon, and Italian insurer Generali. Hannover Re, one of Europe’s big four reinsurers, has placed new and renewal business on hold in Russia.
The Federation of European Risk Management Associations has also suspended Russian member RusRisk, a Brussels-based risk management association in Russia.
Rating agencies, including AM Best, have started to downgrade insurers and reinsurers in Russia to reflect the heightened geopolitical, economic and financial system risk.
All of these actions have been taken either in retaliation to, or to show solidarity with Ukraine, during the Russian invasion, which the aggressor calls a “special operation.”
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