Global shipping insurers to scrap coverage for Russia, Ukraine and Belarus
A group of companies known as P&I (protection and indemnity) clubs that offer insurance for the majority of the world’s ocean-going ships will stop providing war risk coverage in Russia, Ukraine and Belarus from January 1, according to notices on the groups’ websites.
The notices said the insurers will no longer cover any loss, damage, liability, cost or expense “caused by or arising from or in connection with any Russia-Ukraine conflict and/or any expansion of such conflict.” At least 12 of the 13 P&I clubs have announced the move so far.
According to a statement from the UK’s P&I Club, the decision was made due to a mass exit of reinsurers from the region as a result of financial losses due to the ongoing conflict in Ukraine. Reinsurers are companies that provide financial protection to insurance firms and handle risks that are too large for the latter to deal with on their own. The American P&I also said in a notice last week that it had received a “notice of cancellation” for the region from its war risk reinsurers and decided to scrap its own insurance as a result.
The 13 P&I clubs collectively provide liability insurance for over 90% of the world's ocean-going ships and more than 95% of ocean-going tankers. The move will make it harder for both ship owners and charterers to obtain shipping insurance next year. Analysts say it could lead to a surge in shipping costs and force many ships to either sail uninsured or avoid the region altogether.
Some of the globe’s largest providers of reinsurance include Lloyd's of London, Hannover Re, Munich Re and Swiss Re. The firms have so far declined to comment on the move.
Following a similar announcement by Japanese insurers last week, the Japanese government urged them to refrain from scrapping coverage for liquefied natural gas (LNG) shippers sailing through Russian waters, Reuters reported on Wednesday, citing a senior official.
For more stories on economy & finance visit RT's business section