Asset freeze
A sanctions measure that immobilizes all funds of a designated person and prohibits providing any to them, preventing an insurer both from collecting its premium and from paying its claim.
An asset freeze is the central measure of financial sanctions regimes, whether European, British, American or United Nations. It contains two distinct prohibitions, and insurance meets both. The first immobilizes funds and economic resources belonging to, owned, held or controlled by a designated person: they may not be moved, transferred or used. The second prohibits making funds available, directly or indirectly, to that person or for their benefit. For an insurer the second is the more treacherous, because a claim payment is precisely making funds available. A contract concluded with a person later designated therefore continues to exist but can no longer be performed: the insurer can neither pay a claim, nor return a premium, nor sometimes even receive a payment without prior authorization from the competent authority. The notion of control extends the freeze to companies owned or controlled by the designated person, which requires tracing ownership chains, and that is where screening work concentrates.
As early as March 3, 2022, French customs immobilized the yacht Amore Vero at La Ciotat, linked to a Russian executive listed under Regulation (EU) No 269/2014. Its hull insurers could no longer collect premium from the designated owner or pay it any indemnity without authorization, even though the vessel remained exposed to every peril of an immobilized asset.
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