Secondary sanctions
Sanctions by which a state threatens foreign companies that trade with its target, even outside its territory, and which pushed European insurers out of markets their own law allowed.
Primary sanctions prohibit a state's nationals and companies from trading with a target. Secondary sanctions go further: they target foreign persons with no connection to the issuing state, on the ground that they deal with the target, and threaten them with exclusion from its financial system, its market or its lists. The United States is the main issuer, notably regarding Iran and Russia. For a European insurer or reinsurer, the question is not whether the transaction is lawful under European law, but whether it can afford to lose access to the dollar, to its US reinsurers and to its multinational clients. The answer is almost always no, so the insurance market withdraws from whole sectors that its own country's law does not prohibit. It is a pure form of political risk: a foreign sovereign decision changes the insurable perimeter without passing through any contract, and the Union has built a blocking statute against it that places the company between two contradictory obligations.
The 2012 US Iran Freedom and Counter-Proliferation Act expressly targets the provision of underwriting, insurance and reinsurance services to Iran's energy, shipping and shipbuilding sectors. After the US withdrawal from the nuclear agreement on May 8, 2018, those sanctions were reinstated on November 5, 2018, and European insurers withdrew from carrying Iranian oil despite the update of the EU blocking statute in August 2018.
secondary sanctions, extraterritorial sanctions
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