A cargo ship boat model is pictured in front of Ukraine’s and Russian’s flags in this illustration taken March 3, 2022. REUTERS/Dado Ruvic/Illustration
LONDON – Ship insurers said they are canceling war risk cover across Russia, Ukraine and Belarus, following an exit from the region by reinsurers in the face of steep losses.
Reinsurers, who insure the insurers, typically renew their 12-month contracts with insurance clients on Jan. 1, giving them the first opportunity to scale back exposure since the war in Ukraine started, after being hit this year by losses related to the conflict and from Hurricane Ian in Florida.
P&I (protection and indemnity) clubs American, North, UK and West are no longer able to offer war risk cover for liabilities in the region from Jan. 1, they said in recent notices on their websites. The clubs are among the biggest P&I insurers who cover around 90 percent of the world’s ocean going ships.
UK P&I Club said on Dec. 23 that the issue had arisen because of a lack of availability of reinsurance for reinsurers, also known as retrocession.
“The Club’s reinsurers are no longer able to secure reinsurance for war risk exposure to Russian, Ukrainian or Belarus territorial risks,” it said.
American P&I said on Dec. 23 that it had received a “notice of cancellation” for the region from its war risk reinsurers and was cancelling its own insurance as a result.
Ships typically have P&I insurance, which covers third party liability claims including environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage.
The moves by the insurers will make it harder for ship-owners or charterers to find insurance, increase prices and may mean some ships sail uninsured, industry sources say.
Providers of reinsurance and retrocession include global players Hannover Re, Munich Re and Swiss Re, as well as syndicates in the Lloyd’s of London market. The firms did not immediately respond to requests for comment.
Reuters reported earlier this month that a proposed contract clause being circulated by reinsurers excluded war-related claims for both planes 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 (LNG) shippers in Russian waters, a senior official at the industry ministry said this week.