(Reuters) – Western ship insurance companies end protection for Russia’s leading shipping company Sovcomflot as more sanctions begin to bite, say the companies involved, contributing to the growing challenges for the state-owned company and Moscow’s efforts to export oil and gas.
Russia’s shipping sector sees the closure of several services, including ship certification of leading foreign suppliers – crucial for access to ports and secure insurance – shipping companies pull out and ship engine manufacturers discontinue training on their equipment after Moscow’s invasion of Ukraine.
Ships usually have a protection and indemnity insurance, which covers claims for damages from third parties including environmental damage and damage. Separate hull and engine policies cover vessels against physical damage.
P&I insurance company West said in a statement: “In line with the applicable sanctions regimes, West has notified Sovcomflot of a 30-day notice period and coverage will end on May 4, 2022.”;
Sovcomflot said on contact that all its vessels were “insured according to industry standards and requirements in international conventions.”
UK Club, another P&I provider, said in compliance with UK and EU sanctions that they “have issued a 30-day redundancy program to Sovcomflot for their specified vessels in early April.”
The SCF, which has one of the world’s most modern fleets of oil tankers and gas tankers, has been subject to separate sanctions by the United Kingdom and Canada, while the United States has prevented it from raising capital in its financial markets.
The European Union has listed SCF among Russian state-owned companies with which it was “prohibited to participate directly or indirectly in any transaction” after a settlement period ended on 15 May.
It was unclear what insurance coverage SCF had secured. Dozens of its ships had previously been insured by players such as West, UK Club and North, showed shipping records.
Ship insurance sources said that even if Russian insurance coverage, for example, were acceptable, payment issues due to financial sanctions against Moscow could create difficulties for SCF tankers at sea.
Russian ships also have problems securing marine fuel as sellers have stopped servicing ships flying the Russian flag at major European hubs, including Spain and Malta.
SCF vessels, which were previously covered by Norges Gard, were no longer registered on the company’s website.
Gard said they complied with all relevant sanctions and did not comment on individual clients, but communicated “directly with those affected by the situation.”
Mike Salthouse, a senior club manager at another leading P&I insurer North, said that “an agreed termination route has been canceled for which it has now expired so that there are no Sovcomflot vessels currently registered.”
“The majority or virtually all of the clubs involved would in all likelihood not have felt able to continue operations after May 15 when the settlement periods end and the EU and UK ban on providing insurance to Sovcomflot takes effect,” he told Reuters.
“The act of terminating an entry as a Sovcomflot is made more complicated due to the different legislative strategy adopted by different jurisdictions. Clubs and other insurance companies will have had to spend time resolving any inconsistencies in a way that does not disadvantage existing third-party applicants. “