Chinmyika Namdeo,

Deputy Manager, The New India Assurance Co. Ltd, Mumbai

Sanctions and International trade are two concepts that have a significant impact on the General Insurance market. Sanctions are restrictions or penalties imposed on countries or individuals to achieve specific policy goals, while international trade involves the exchange of goods and services between countries. The interplay between these two concepts affects the General Insurance market in several ways.

 Sanctions can impact the General Insurance market in several ways. Firstly, sanctions can limit the ability of insurers to underwrite or provide coverage for certain types of risk. For example, sanctions against Iran have restricted the ability of insurers to provide coverage for oil tankers sailing to and from Iran, resulting in a shortage of available insurance coverage and increased costs for shippers. Secondly, sanctions can also lead to a reduction in demand for insurance products. For instance, sanctions on Russia have led to a decline in economic activity, resulting in reduced demand for insurance products.

 An example, for several decades, the United States imposed economic sanctions on Cuba, which included restrictions on the ability of American insurers to underwrite insurance coverage for Cuban risks. This created opportunities for insurers from other countries, such as European insurers, to provide coverage for Cuban risks. However, in recent years, there has been a thawing of relations between the United States and Cuba, which has led to an increase in trade between the two countries. This has created new opportunities for American insurers to underwrite insurance coverage for Cuban risks, leading to increased competition in the market.

The interplay between sanctions and international trade has a significant impact on the General Insurance market. Insurers need to stay abreast of changes in international trade and sanctions regimes to identify new opportunities and potential risks and have a deep understanding of the regulatory and legal frameworks governing international trade and sanctions to ensure compliance with applicable laws and regulations.

Citation:

Sousa, R., & Chaudhry, E. (2017). The Impact of Sanctions and International Trade on the Insurance Industry. Geneva Papers on Risk and Insurance-Issues and Practice, 42(4), 588-604. doi: 10.1057/s41288-017-0063-2