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Global Financial Solutions Claims Review 2024

By Claire Simpson | January 30, 2025

This review looks at the credit and political risk insurance losses in 2024.
Claims|Credit and Political Risk|Financial, Executive and Professional Risks (FINEX)
Geopolitical Risk

At the close of 2023, we predicted that 2024 would be a busy year for claims activity – and indeed it was – but the year unfolded in an unexpected way.

WTW Financial Institution (FI) clients had only $30.7 million of claims paid[1]. This figure is up from $22 million paid in 2023 but is still considerably down on the historic run-rate. These claims were all paid in full and relate largely to ongoing instalments on past sovereign defaults, albeit there was also a modest credit loss. The 2023 market figures published in spring 2024 also show FI client claims to be consistent over 2022 at around $530 million[2].

This however doesn’t paint the full picture – we have had several new material notifications through, all of which are potential credit losses that will play out during 2025, covering different sectors and geographies.

One new challenge that arose during 2024 was the combination of the widening Russian sanctions regime and the impact of the Celestial Aviation Services Limited v UniCredit Bank GmbH [2024] EWCA Civ 628 judgment, which was handed down by the Court of Appeal on 11 June 2024.

Whilst we only have a couple of cases in progress, we are aware of many others in the market that have left insurers and their counsel needing to assess the way forward. Each individual case is being reviewed in light of its own specific circumstances, with some needing to be referred by insurers to the UK Office of Trade Sanction Implementation (OTSI) to seek permission to pay insurance claims. This lack of clarity is of concern, given the importance of claim timelines to our clients, but the market is trying to formulate a collective response.

It was a positive year once again for WTW recoveries, with $23.7 million achieved, split 52% sovereign and 48% credit. Debt sales played an important part in these recoveries, but some of the older sovereign defaults are now in recovery mode, so rescheduled debt is also now seeing performance.

Whilst our FI clients had a relatively light loss year, there was more activity for our corporate clients. Sectors impacted include construction, food and drink, transportation, automotive and consumer, with insolvencies being a key driver for claims.

This is being borne out by the wider market, with Allianz Trade reporting that U.K. insolvencies are expected to hit a 12-year high (peaking at 43% above pre-Covid levels). Global insolvencies are also expected to rise 11% in 2024.

Political risk remained on the agenda for 2024. Loss notifications were down, but governmental interference was a continued threat for many, and remains a talking point with our clients into 2025 as shown in our 2024 Political Risk Survey Report.

We’re also aware of a few significant market losses suffered by traders in 2024 – all pointing to a more complex claims landscape than the general FI market claims suggest.

What lies ahead for claims in 2025?

2025 is promising to be a more active claims year for WTW FI clients given the notifications we’ve had already, but this must be measured against the promise of lowering interest rates reducing some of the financial strain on everyone, corporates and FI’s alike.

For more information please contact our Financial Solutions team.

Footnotes

  1. Please note the data referenced in this Claims review is from WTW’s CPRI Claims & Recovery Database, 2024. Return to article
  2. Market Claims for Regulated Financial Entities 2023 Return to article

Author


Global Head of Claims, Willis

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