Non-payment insurance claims totalling US$88.9mn were left in limbo last year as insurers tried to avoid violating US and UK sanctions, recent data has shown.
According to the latest annual trade credit claims survey, four claims were not paid on time in 2025 because of sanctions concerns – representing 3% of the total number of claims and 20% of the overall value of claims for that year.
This was due to “insurers seeking clarity from the relevant authorities over the detail and scope of sanction”, including “obtaining a formal licence or exemption”, the survey said. Overall, 136 claims – totalling US$438.5mn – were payable in 2025.
The survey was carried out by A2Z Risk Services, on behalf of the Lloyd’s Market Association, the International Underwriting Association and the London & International Insurance Brokers’ Association.
The data refers only to non-payment insurance, not trade credit insurance more widely, and applies to regulated financial institutions only.
Marian Boyle, partner and head of Sullivan’s UK insurance and disputes practices, told GTR that the “exact circumstances behind the non-payment of these claims is unknown”, because the claims data is anonymised.
However, she points out that it is “well known” that “claims involving a potential Russian nexus are taking longer to process”.
“Obtaining licences from the relevant government departments can take many months,” she explained.
Insurers have 180 days to pay from the date of default for the payment to be considered timely, and the survey had previously revealed a 100% payment record for the product.
But since June 2024, insurers have had to comply with a new requirement to apply for licences before they can pay certain claims from bodies such as the UK’s Export Control Joint Unit (ECJU) or the US’ Office of Foreign Assets Control (OFAC).
The licence requirement stems from a UK Court of Appeal decision from June 2024 in a closely watched sanctions case involving UniCredit, which found that the bank was right to refuse payments under letters of credit (LCs) issued before Russia’s invasion of Ukraine.
Before this judgment, UK-based insurers did not require a license for these types of transaction.
In March this year, the decision was upheld by the UK’s Supreme Court. It dismissed appeals from two Irish aircraft leasing companies and allowed an appeal from the London branch of UniCredit Germany, which had confirmed 12 standby letters of credit issued by Russia’s Sberbank.
Boyle noted the courts had made it clear that the Russia sanctions should be interpreted as “casting a ‘wide net’”.
According to the regulations, financial services or funds must not be provided “in pursuance of or in connection with an arrangement” that results “directly or indirectly [in] making restricted goods or restricted technology available” to Russia.
“The courts have held that the regulation only requires a connection between the provision of financial services or funds and an ‘arrangement’,” Boyle said. “There does not have to be a causal connection.”
This regulation covers scenarios such as financing of commodities that originated in Russia, rather than the provision of economic benefits to sanctioned entities, which are dealt with in the UK by the Office of Financial Sanctions Implementation.
The survey also found that three claims amounting to US$14.3mn – representing 2% of claims made and just over 3% by claims amount – were paid late due to issues over “payment mechanics”, rather than “the insurer disputing the merit or amount of the claim”.
The number of claims in 2025 was the lowest figure since 2021, falling from 227 in 2023 and 185 in 2024.
Africa represented the highest number of claims at 63%, while the largest amount was paid for European claims, which made up just 17% of the total volume.
