Ship Insurers Suspending War Risk Cover in Russia, Ukraine, Belarus
- December 28, 2022
- Posted by: Quatro Strategies
- Category: Politics
Ship insurers have decided to stop war risk cover across Russia, Ukraine and Belarus, as reinsurers have started withdrawing from the region amid steep losses. Reinsurers normally renew their 12-month contracts with insurance clients on Jan. 1, which gives them the first opportunity to scale back exposure since Russia’s invasion of Ukraine was launched on Feb. 24. The insurance companies have been hit by losses resulting from the war in Ukraine this year.
Protection and Indemnity (P&I) clubs in the United States, the North, the West and the United Kingdom said they would no longer offer war risk cover for liabilities in the region from Jan. 1. The clubs are among the biggest P&I insurers who cover around 90% of the world’s ocean going ships.
UK P&I Club said on Dec. 23 that the issue had arisen because of a lack of availability of reinsurance for reinsurers, also known as retrocession.
“The Club’s reinsurers are no longer able to secure reinsurance for war risk exposure to Russian, Ukrainian or Belarus territorial risks,” it said.
American P&I said the same day that it had received a “notice of cancellation” for the region from its war risk reinsurers and was cancelling its own insurance as a result.
P&I insurance covers third party liability claims such as environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage
The moves by the insurers will make it harder for ship-owners or charterers to find insurance, increase prices and may mean some ships sail uninsured.
Providers of reinsurance and retrocession include global players Hannover Re, Munich Re and Swiss Re, as well as syndicates in the Lloyd’s of London market.
Earlier this month, a proposed contract clause that was circulated by reinsurers excluded war-related claims for both aircraft and vessels in Ukraine, Russia and Belarus.
The Japanese government has also said earlier this week that insurers might have to take on additional risks to continue providing marine war insurance for LNG shipments in Russian waters.
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