The Lloyds Market Association (LMA) has published advice received from Counsel on coverage following the recent introduction of sanctions against Russia.
The questions covered included whether insurance cover can be viewed as a form of financial asset or benefit which is being made available to an asset frozen person through continued provision of cover. Counsel concluded that the provision of insurance cover would not fall within the meaning of “Funds” (as defined in section 60 of SAMLA 2018). As to whether it could fall within the meaning of “economic resources”, Counsel said this is more nuanced. Normally, it would not, except that the wording in Regulations 14 and 15 of the Russian regulations is so broad that there could be arguments that the provision of cover would be an economic resource if there was reasonable cause to believe either that the designated person would exchange the policy or use it as security to get goods, or that a designated person would obtain significant financial benefit from the provision of the insurance to the insured person. So each case would need to be assessed on its particular fact pattern.
However, regardless of the answer on the “economic resources” point, once a risk occurs and the obligation to pay is triggered, at that point the insurer’s obligation to pay and the insured’s right to payment would fall within the meaning of “funds and economic resources”.