The State Of Play In Key Sanctions Regimes

Unquestionably, 2014 was a busy year for (re)insurers responding to developments in sanctions. The greater use of sectoral sanctions created challenges for (re)insurers, as did the pace and significance of some of the changes made to established sanctions regimes.

In this article, we look at the current state of play in the following key sanctions regimes and what this means for (re)insurers:

Russia Crimea Cuba North Korea Iran Syria 1. Russia: Movement to sectoral sanctions

In response to the destabilisation in Crimea and Ukraine, the EU and US introduced "sectoral sanctions" on the following sectors of the Russian economy:

Defence Finance Energy These sectoral sanctions are designed to focus on key business interests in Russia and to complement traditional asset freezing measures imposed on military and political figures in the region as well as those close to President Putin.

Defence

EU sanctions prohibit (re)insurance in connection with the supply of items on the Common Military List, and export credit insurance for "dual use" military goods. By contrast, US sanctions only prohibit "US Persons" (meaning, primarily, US citizens and US incorporated companies) from engaging in transactions involving the long-term debt of persons (including entities) in the Russian defence sector.

Finance

EU and US sanctions in this sector are designed to restrict the ability of certain Russian banks to raise long-term finance on the international capital markets. In September, the EU and US acted in concert to reduce the maturity of targeted financial instruments from more than 90 days to more than 30 days.

Energy

Both regimes introduced bans on the supply of specialist equipment and technology for use in Arctic, deep water and shale oil projects in Russia. The EU has restricted the provision of certain "associated services", such as drilling, well-testing and the supply of specialist floating vessels for use in such projects.

There was uncertainty across the EU about how to interpret some of the measures. For instance, "deep water" and "Arctic" were not defined by the EU. Guidance from the UK's Department for Business, Innovation and Skills (BIS) indicated that the UK would follow some of the US definitions. This left room for differing interpretations, and applications, of the sanctions in the various EU member states.

In December, the EU fine-tuned key definitions:

"Arctic" has been replaced with "the offshore area north of the Arctic Circle" "Deep...