Ship insurers will cancel military cover for Russia and Ukraine from January 1Thank you for reading this post, don't forget to subscribe!
LONDON, Dec 28 (Reuters) – Ship insurers said they were canceling war risk cover in Russia, Ukraine and Belarus after reinsurers pulled out of the region in the face of heavy losses.
Reinsurers, who insure insurers, typically renew their 12-month contracts with insurance clients on January 1, giving them the first opportunity to reduce exposure since the start of the war in Ukraine after being hit by conflict-related and hurricane losses this year Ian in Florida.
American, North, British and Western P&I (protection and indemnity) clubs can no longer offer war risk cover for some duties in the region from January 1, they said in recent notices on their websites. Clubs are among the largest P&I insurers, covering around 90% of the world’s ocean-going vessels.
The UK P&I Club said on December 23 that the problem arose because of the lack of reinsurance for reinsurers, also known as retrocession.
“The Club’s reinsurers are no longer able to provide reinsurance for military exposure to Russian, Ukrainian or Belarusian territorial risks,” it said.
American P&I said on December 23 that it had received a “cancellation notice” for the region from its military risk reinsurers and was canceling its own insurance as a result.
Ships usually have P&I insurance, which covers third-party liability claims, including environmental damage and personal injury. Separate hull and machinery policies cover ships against physical damage.
The withdrawal of coverage for Ukraine and Russia applies to some but not all types of policies offered by the P&I clubs, three P&I insurance sources said.
“It’s driven by reinsurance,” said Steven Rebair, deputy global director, insurance at North, adding that reinsurers are limiting their exposure to the region and “those exclusions need to be passed down the line.”
The exemptions will make it harder for charterers to find insurance, drive up prices and could mean some ships sail uninsured, industry sources say.
Reinsurance and retrocession providers include global players Hannover Re (HNRGn.DE)Munich Re (MUVGn.DE) and Swiss Re (SRENH.S), as well as syndicates on the Lloyd’s of London (SOLYD.UL) market. All the companies declined to comment.
Reuters reported earlier this month that a proposed contract clause circulated by reinsurers excluded war-related claims for both aircraft and ships in Ukraine, Russia and Belarus.
The Japanese government appealed insurers to take on additional risks to continue providing marine military insurance for liquefied natural gas (LNG) carriers in Russian waters, a senior industry ministry official said this week.
Reporting by Carolyn Kohn and Jonathan Saul in London Editing by Muralikumar Anantharaman and Matthew Lewis
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