All Russian waters deemed high risk for shipping insurance
11 April 2022
In a significant move that looks certain to influence insurance premiums, London’s marine insurance market has added all of Russia’s waters to its list of areas deemed high risk.
This move is likely to raise the cost of shipping and adds to the logistical pressures on Russia.
The guidance was delivered by the Joint War Committee, which comprises syndicate members from the Lloyd’s Market Association (LMA) and representatives from the London insurance company market.
As a reaction to the Russian invasion of Ukraine, the JWC last month added Ukrainian and Russian waters around the Black Sea and Sea of Azov to its high-risk areas, as well as waters close to Romania and Georgia.
Shipping officials have reported that two seafarers have been killed and five merchant vessels hit by projectiles - which sank one of them - off Ukraine's coast since the start of the conflict.
Ukraine and Russia have accused each other of laying mines in the Black Sea, and this month Turkish and Romanian military diving teams have defused stray mines around their waters. “The information available points to a clear threat to shipping and seafarers from floating and drifting mines in areas of the Black Sea," said a spokesperson with the UN shipping agency the International Maritime Organization.
By extending the area of high risk, the JWC is adding it to the regions judged high-risk for merchant ships and prone to war, piracy, terrorism and related perils, will mean that vessels will need to notify underwriters when sailing into ports as well as having to pay an additional premium for a seven-day cover period.
"Rating is a matter for individual negotiation between underwriters and brokers and the JWC plays no role in that," the JWC said.
Russia relies on its Baltic and Black Sea ports for oil and grains exports, which are significant foreign currency earners. Other terminals, such as Kozmino in Asia, are needed for Russian exports to that region.
Russia's maritime sector is grappling with the winding down of services including ship certification by leading foreign providers - needed for accessing ports and securing insurance. Some shipping companies have withdrawn and ship engine makers have suspended training on their equipment following the imposition of Western sanctions on Moscow.
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