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New exclusions: cancellation due to sanctions

A new type of exclusion has appeared. The average policyholder has nothing to worry about. Perhaps it would be more accurate to say - only the most extraordinary policyholders have any concerns, and if they did, we should probably have concerns about them.  That's because the new exclusion is to remind people that if they - or a related party - are subject to sanctions from a range of western economies or the United Nations, then the policy may be cancelled. Here is the section from AIA's policy document: 

Cancellation due to Sanctions
We shall not provide cover for any risk and/or activity and shall not be liable to pay any claim or pay any benefit hereunder to the extent that the provision of such cover, payment of such claim or provision of such benefit would be in respect of a person who is the subject of any sanction, prohibition or restriction under United Nations resolutions or trade or economic sanctions, laws or regulations of New Zealand, the European Union, United Kingdom or United States of America, or any of its states and/or any other applicable economic or trade sanction laws or regulations.
This provision applies without limitation not only to the policy owner or holder, but to the life assured and any assignee, other third party, related party or beneficiary of the policy.
Should we determine that the above is applicable, we may at our sole discretion terminate the policy with immediate effect.

This should probably be seen in the context of the conduct conversation. If you have been following the concerns about Westpac Bank in Australia raised by the AUSTRAC, the regulator responsible for enforcement of the equivalent of our AML-CFT laws you will see that context is no longer purely local. Regulators expect companies to have oversight mechanisms in place, and tools to manage actions that the regulator may require. That's what AIA's new cancellation mechanism is about. Hopefully it may never get used, but a prudent approach is to have the tools available just in case. 


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