Major shipping companies of Russia cancel agreements with foreign insurers – experts
Russian insurance companies are expected to share their capacity with each other via reinsurance
Key events changing the marine insurance market in Russia are cancellations of obligatory reinsurance agreements with Russian insurance companies from the part foreign reinsurers as well as countermeasures announced by the Russian Government, namely the ban on dealing with insurance companies from unfriendly countries and the ban on using the services of international insurance brokers or structures controlled by them, told experts PortNews in the special report published today.
“As of today, we already have examples when large fleets of Russia not covered by direct sanctions make decisions on cancellation of insurance agreements with western insurers and have their risks covered in Russia. Of course, for some ship owners it is right to maintain insurance in the foreign market which depends on the specifics of the operation area, cargo base and other aspects,” say experts.
According to them, everything exceeding net retention ($0.5-5 million) used to be reinsured in the UK and in Europe with almost all risks finalized in the USA since almost all Lloyd’s syndicates, some of European insurance companies and almost all insurance agents are partially owned by American companies.
“I expect Russian insurance companies to be more willing to share their capacity with each other via reinsurance or co-insurance when each company holds its share of risks. I do not rule out eventual creation of an insurance pool but the experience shows that it entails the increase of administrative expenses while the market is currently focused on the business costs optimization,” said PortNews source.
Experts hope that more information about the new shipping reality comes in the near month in the part of international norms and awareness of the logistics layout.
On February 24, Russian President Vladimir Putin announced a “special military operation” in Donbass. The USA and other NATO and EU countries expressed disapproval of Russia’s actions. A package of sanctions has been imposed on Russia, its Central Bank, NWF, the Ministry of Finance, state banks and companies.
In the end of February, Russia’s shipping market, classification societies and ports as well as logistic, insurance and transport companies fell under the US and EU sanctions. Restrictions also covered seaborne transportation of containers thus aggravating the situation with import/export operations.
Russian logistic companies are looking for alternative routes, the companies are considering alternatives for equipment earlier delivered from the Europe while ship owners adjust the voyages en route.
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