Insurers revising coverage to sanctioned countries

We received the following today from the World Cargo Alliance, the forwarders group to which we belong:

Sanctions Beginning to Affect Insurance Coverage

In response to growing pressure from various countries and political organizations around the world, insurers (including Lloyds of London), are amending their policies to exclude coverage where providing such may violate imposed economic sanctions. This exclusion is already in place in new commercial insurance policies and will be added to existing policies via endorsement by the end of 2010.

The new “Sanction Limitation and Exclusion Clause” reads as follows:

NO (RE)INSURER SHALL BE DEEMED TO PROVIDE COVER AND NO (RE)INSURER SHALL BE LIABLE
TO PAY ANY CLAIM OR PROVIDE ANY BENEFIT HEREUNDER TO THE EXTENT THAT THE PROVISION
OF SUCH COVER, PAYMENT OF SUCH CLAIM OR PROVISION OF SUCH BENEFIT WOULD EXPOSE
THAT (RE)INSURER TO ANY SANCTION, PROHIBITION OR RESTRICTION UNDER UNITED NATIONS
RESOLUTIONS OR THE TRADE OR ECONOMIC SANCTIONS, LAWS OR REGULATIONS OF THE EUROPEAN UNION, UNITED KINGDOM OR UNITED STATES OF AMERICA.

The severity of the punishment for violating sanctions coupled with the broad nature of this new insurance clause places extra emphasis on the insured to verify that none of their operations are in violation. The responsibility to ensure compliance lies solely with the insured and all precautions should be taken to do so.