All Russian waterways labelled as high risk by London marine insurers

London’s marine insurance market put all of Russia’s seas to its list of high-risk locations on Monday, raising the cost of shipping and adding to Moscow’s logistical challenges.

 

The Joint War Committee, which consists of Lloyd’s Market Association (LMA) syndicate members and officials from the London insurance firm market, is highly followed and influences underwriters’ premium calculations.

 

 

Following Russia’s invasion of Ukraine on February 24, the JWC added Ukrainian and Russian waters around the Black Sea and Sea of Azov, as well as waters near Romania and Georgia, to its high-risk areas last month.

 

With the widening of the high-risk region for merchant ships, which is prone to war, piracy, terrorism, and other calamities, vessels will have to notify underwriters when entering ports and pay an extra premium for a seven-day cover period.

 

The JWC stated, ‘rating is a matter for individual negotiation between underwriters and brokers, and the JWC has no role in this.’

 

Premium increases are expected to take a few days after a notification period, according to marine insurers.

 

On condition of anonymity, one marine insurance source said that Monday’s advise was unexpected and will ‘add to the complications of trading with Russia.’

 

Oil and grain exports, which are key foreign currency earners, are reliant on Russia’s Baltic and Black Sea ports. For Russian exports to Asia, other terminals, such as Kozmino in Asia, are required.

 

A European grains dealer said that it was already difficult to find ship owners prepared to visit any Russian ports, and that there was no certainty of being able to insure against war risks.

 

‘This will exacerbate the problems, but it will not put a complete halt to them,’ the trader predicted.

 

The Russian marine sector is coping with the phasing out of services such as ship certification by key Western providers, which is required for port access and insurance.

 

Following the introduction of Western sanctions on Moscow, certain shipping businesses have withdrawn, and ship engine manufacturers have ceased training on their equipment.