(Reuters) – Marine insurers said they were suspending cover for war risks in Russia, Ukraine and Belarus, after reinsurers exited the region in the face of heavy losses.
Reinsurers, who insure the insurers, typically renew their 12-month contracts with policyholders on Jan. 1, giving them the first opportunity to reduce exposure since the war in Ukraine began, after suffering losses this year related to the conflict and from Hurricane Ian in Florida .
Protection and indemnity clubs American, Northern, British and Western can no longer offer war risk protection for liabilities in the region from January 1, they said in the latest notices on their websites. The clubs are among the largest P&I insurers, covering approximately 90% of the world̵7;s ocean-going vessels.
The UK P&I Club said on 23 December that the problem had arisen due to a lack of access to reinsurance for reinsurers, also known as retrocessional cover.
“The club’s reinsurers can no longer secure war risk reinsurance for Russian, Ukrainian or Belarusian territorial risks,” it said.
The American P&I Club said on December 23 that it had received a “notice of termination” for the region from its war risk reinsurers and is canceling its own insurance as a result.
Ships usually carry P&I insurance, which covers third-party claims including environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage.
Actions by insurers will make it harder for ship owners or charterers to find insurance, raise prices and could mean some ships sail uninsured, industry sources say.
Providers of reinsurance and retrocessional coverage include global players Hannover Re SE, Munich Reinsurance Co. and Swiss Re Ltd., as well as syndicates at Lloyd’s of London. Munich Re and Swiss Re declined to comment. The other companies did not immediately respond.
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 has urged insurers to take on additional risks to continue providing marine war insurance for liquefied natural gas carriers in Russian waters, a senior Industry Ministry official said this week.