(Reuters) – London’s marine insurance market on Monday added all of Russia’s waters to its list of high – risk areas, showed advice, which is likely to increase shipping costs and increase logistical pressure on Moscow.
Guidance from the Joint War Committee, made up of syndicate members from the Lloyd’s Market Association and representatives from the London insurance company market, is closely monitored and influences insurers’ considerations on insurance premiums.
Following Russia’s invasion of Ukraine on February 24, the JWC last month added Ukrainian and Russian waters around the Black Sea and the Azov Sea to its high-risk areas, as well as waters near Romania and Georgia.
Monday̵7;s expansion of the area, which is considered to be high risk for merchant ships and exposed to war, piracy, terrorism and related dangers, will mean that ships will have to notify guarantors when they sail into ports and will have to pay an extra premium for a seven-seater. day coverage time.
“Rating is a matter of individual negotiation between insurers and brokers and the JWC does not play a role in that,” the JWC said.
Maritime insurance companies said that each increase in premiums was expected to take a few days after a registration period.
A maritime insurance source, speaking on condition of anonymity, said Monday’s advice was unexpected and would “add to the complexity of trade with Russia.”
Russia relies on its ports in the Baltic Sea and the Black Sea to export oil and grain, which earn significant foreign exchange. Other terminals, such as Kozmino in Asia, are needed for Russian exports to that region.
A European grain trader said it was already difficult to find shipowners willing to go to all Russian ports, adding that there was no guarantee of being able to insure against the risks of war.
“This will increase the problems but not stop them completely,” said the trader.
Russia’s shipping sector is struggling with the phasing out of services including ship certification of leading foreign suppliers needed to access ports and secure insurance.
In addition, some shipping companies have withdrawn and ship engine manufacturers have discontinued training on their equipment following the imposition of Western sanctions on Moscow.