March 21, 2023

Moscow is seeking to bolster the recognition of Russian maritime cargo insurance to allow it to ship oil and related products abroad in the face of Western sanctions, a government official was quoted as saying on Tuesday.

Western sanctions imposed in response to Russia’s military campaign in Ukraine have restricted Russia’s ability to secure costly liability insurance for its ships – a segment requiring financial heft and dominated by European reinsurers, in which Russia has little experience or capacity.

Deputy Transport Minister Alexander Poshivay, speaking at a China-Russia energy conference in Moscow, acknowledged the challenges faced by Russian shippers.

Russia Says It Won’t Sell Oil to Nations That Cap Prices

In addition to a lack of access to insurance services traditionally provided by European and U.S. companies, they had also had to deal with non-recognition of certificates issued by Russian insurers and the Russian National Reinsurance Company because Lloyd’s syndicates had declared Russian waters a war risk zone.

European Union and Group of Seven governments have been trying to agree on a price cap for Russian seaborne crude oil – which represents some 70%-85% of Russia’s crude exports – to restrict Moscow’s ability to finance its campaign in Ukraine.

The main tool to enforce it would be prohibiting shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe, unless they had been sold for less than the cap set by the G7 and its allies.

Poshivay said Russian state-flagged vessels now being denied insurance by Western companies were being insured with Russian insurance companies and reinsured with the Russian National Reinsurance Company, according to Interfax.

The news agency quoted him as saying that Turkey recognized Russian insurance of maritime cargo, and that India and China recognized most Russian insurance, but not all.

“The issue (of recognition of Russian insurance) is to be worked out with the whole world,” Poshivay said, adding that the specific conditions “are determined by intergovernmental agreements.”

No comment was immediately available from Turkish, Indian or Chinese authorities. However, a source at a Turkish shipping company said Turkish authorities had not given any instructions or unofficial guidance on recognizing Russian insurance.

Poshivay suggested that China for one should recognize the certificates issued by Russian maritime insurance and reinsurance companies as guarantees of risk coverage.

He said that in the first nine months of this year, the Russian Federation had increased seaborne exports of hydrocarbons to China by 25%, to 87 million tonnes.

(Reporting by Reuters; additional reporting by Can Sezer in Turkey; editing by Jan Harvey)

Photograph: An oil tanker is moored at the Sheskharis complex, part of Chernomortransneft JSC, a subsidiary of Transneft PJSC, in Novorossiysk, Russia, on Tuesday, Oct. 11, 2022, one of the largest facilities for oil and petroleum products in southern Russia. The deadline is looming for Western allies to agree on a price cap on Russia oil. The cap proposed by U.S. Treasury Secretary Janet Yellen aims to reduce Russia’s oil earnings that support its military and the invasion of Ukraine. But there are questions about how effective the cap will be. The Dec. 5 start date also coincides with the European Union’s embargo on most Russian oil shipments. Photo credit: AP Photo, File.


The most important insurance news,in your inbox every business day.

Get the insurance industry’s trusted newsletter

Leave a Reply

Your email address will not be published. Required fields are marked *