UK ban on insuring Russian clients will target all financial flows on new & existing business: PRA

UK government bans on insuring Russian aviation and aerospace industries will apply to both new and existing policies with an aim of cutting off all flows between sides, key UK regulatory officials told the House of Lords committee.

"The theme here is the same across all sanctions: the intention is to cut off the Russian financial system from our financial system," Sam Woods (pictured), deputy governor of the Bank of England and head of the UK's Prudential Regulation Authority (PRA), told the Lords.

The ban should disable "all payments that are related to existing business as well as new contracts," added Anna Sweeney, executive director for risk, operations and general insurance at the Bank of England.

"It would be a ban on new contracts, but would also be related to payments on claims on existing contracts."

The targeted ban implemented to date has proven "quite a scramble" to implement, Woods admitted.

Woods claimed his office had "no insight" as to whether the government was considering extensions on the insurance bans. Action on the energy market would be the biggest challenge, he admitted.

The Bank of England and the PRA are playing chiefly a technical advisory role in construction of sanctions, including on collateral damage likely to ricochet back at the UK financial system.

"We look very carefully if these are manageable in terms of any sort of collateral damage or impact on the UK financial services sector and so far, we are comfortable that they are," Woods said.

On March 3, the UK announced a ban on insurance coverage of the Russian aviation and space industry and said it would expand the ban shortly to cover unspecified further portions of the Russian economy.

"The UK Government will bring in legislation to prohibit UK based insurance and reinsurance providers from undertaking financial transactions connected with a Russian entity or for use in Russia," the Treasury said at the time. Details are pending "in due course."

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