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.
Subscribe to Top Insights Today
The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights
Join the ranks of global executives and subscribe to Top Insights Today
Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business
Read more insights
Risen Raises Stakes with Inner Mongolia Integrated Solar Power Factory
China’s Risen Energy is planning to build a 45 billion yuan ($7 billion) integrated solar power factory in Inner Mongolia that will be powered with clean energy. The plant will produce materials such as industrial silicon and finished solar modules. It will also host and draw power from solar and wind energy storage facilities.
Saudi Arabia to Organize China-Arab Summit During Xi’s Visit
Saudi Arabia is planning to organize a China-Arab summit on Dec. 9 during Chinese President Xi’s visit to the kingdom. Xi is set to arrive in Riyadh on Dec. 7, at a time when U.S.-Saudi relations have soured over OPEC’s decision to reduce oil supplies and concerns over growing Chinese influence in the Middle East. Saudi Arabia has sent invitations to leaders in the Middle East and North Africa for the meeting.
Japan Mulling Over Pacific Meeting on the Sidelines of NATO Summit
Japan’s Prime Minister Kishida eyes a meeting with leaders of Australia, New Zealand and South Korea on the sidelines of the NATO Summit scheduled later this month in Madrid. Kishida wants to show solidarity against a more assertive China.