On 17 October 2014, Lloyd’s of London, the specialist insurance market, issued market bulletin Y4832 setting out its position regarding the use and function of sanctions clauses on insurance and reinsurance contracts.
The bulletin primarily considers the EU and UK sanctions regimes. It provides guidance on the purpose, context and contents of sanctions clauses, and considerations to be taken into account by insurers when considering how to apply sanctions clauses. It also proposes situations when risks should not be underwritten at all. The bulletin takes the position that managing agents should not offer to remove sanctions clauses to gain a competitive advantage.