Thursday, July 25, 2024

 

West P&I: Sanctions on Russian Insurer Could Impede Claims

STS transfer
Claims involving an STS transfer with a Russian-insured vessel could be especially hard to cover (file image)

PUBLISHED JUL 24, 2024 8:09 PM BY THE MARITIME EXECUTIVE

 

The UK-based P&I club West has warned its shipowning customers that it may not be able to pay out in the event of a casualty involving a vessel insured by Ingosstrakh, the Russian underwriter that helps "shadow fleet" tankers keep moving without Western services. 

Ingosstrakh has attracted the attention of Western regulators because it facilitates the continued sale of Russian oil at full price, circumventing the service-provider restrictions of the G7 price cap. Since the implementation of the cap in 2022, Russian shipping interests have acquired their own aging tankers, relocating ownership and flag registration to lightly-regulated jurisdictions. Exiled from the European maritime-service sector by the G7 cap, these new "dark fleet" operators have turned to new insurance providers - like Ingosstrakh.

In addition to its status as a gray-zone underwriter, Ingosstrakh also faces concerns that it may not be willing to pay in the event of a major claim. In March, investigative NGO DanWatch and the Financial Times reported that Ingosstrakh may deny casualty claims if an insured oil cargo breaches the G7 price cap - even though all or most of its customers' cargoes likely do. 

Last month, the British government added Ingosstrakh to its list of sanctioned Russian companies. Though the company has few ties to Britain, the sanctions measure is expected to have secondary effects on Ingosstrakh's business as counterparties evaluate the risk of interacting with a sanctioned Russian company. 

"The potential effect lies in whether e.g. Indian authorities will reconsider their stance on accepting vessels insured by a freshly sanctioned insurer into their ports," Malin Hogberg, director of corporate legal at Swedish Club, told Reuters at the time. 

In a circular released this week, West P&I warned shipowners that the UK's designation of Ingosstrakh could have another effect. As West is a UK-based company, it is prohibited from "making funds or economic resources directly or indirectly available to or for the benefit of" a sanctioned firm like Ingosstrakh. In the event of a casualty involving an Ingosstrakh-covered vessel, West "may be constrained on our ability to provide cover for members with regard to any liabilities incurred" - particularly if the damage is caused during an STS transfer with the Russian-insured vessel, the club warned. 

Even if the casualty were a pure accident, like a collision, West might need to apply for a government license in order to pay a claim - if a license could be obtained at all, the insurer warned. 

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