The state-controlled Russian National Reinsurance Company (RNRC) is now the main reinsurer for Russian ships, including the Sovcomflot fleet, after Western insurance companies withdrew cover from Russian shipowners, said to Reuters three people familiar with the matter.
Insurance is essential for maritime transport, especially oil cargoes which require the highest standards of safety due to the risk of spills and the shipment of flammable materials on the high seas.
Before Western sanctions were imposed on Russia for its invasion of Ukraine, which Moscow calls a “special military operation”, the insurance of these shipments relied on the reinsurance of an international pool of companies offering wide coverage. .
Western insurers withdrew cover from state-owned Sovcomflot (SCF) when Russia’s biggest shipping group was hit with sanctions, but Western insurance sources said Russian replacement cover would likely be enough to allow Russian ships to continue sailing.
Russian Security Council Deputy Chairman Dmitry Medvedev said this week that state guarantees would be offered as insurance for the transport of Russian goods, without giving details.
The sources, who declined to be identified due to the sensitivity of the issue, said RNRC, controlled by Russia’s central bank, was now the main company providing state guarantees to Russian insurance companies which offered cover such as Ingosstrakh, which insures Russian tankers, including the SCF fleet. .
RNRC, Ingosstrakh and Sovcomflot did not respond to Reuters requests for comment.
Russia’s central bank said in March it had raised RNRC’s capitalization from 71 billion rubles to 300 billion rubles and increased its guaranteed capital to 750 billion rubles so that the company has sufficient resources to provide reinsurance. .
“The increase in RNRC’s authorized capital will provide Russian insurers with greater opportunities to reinsure risks inside Russia, create additional reinsurance capacity and manage new sanctions risks,” it said. he said in a report.
Insurance cover
Vessels are commercially required to have Protection and Indemnity (P&I) insurance, which covers liability claims, including environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage.
According to Ingosstrakh’s website, the company offers P&I reinsurance of up to $1 billion.
An equal amount was guaranteed by Japan and India for Iranian shipments made in 2012, a time when Iran was under Western sanctions and excluded from the global insurance market.
Western reinsurers typically have higher capital allowances with allowances for different types of cover such as marine insurance, which provides the full range of protection for ships, Western insurance sources said.
“I would imagine that this capital (of RNRC) is not purely marine and therefore could be burnt very quickly,” said a Western insurance industry source.
The International Group of P&I Insurers’ reinsurance pooling program, which covers P&I insurance for approximately 90% of ocean-going vessels, is capped at a maximum of $3.1 billion for each incident.
Two tanker market sources said RNRC’s capitalization would allow it to act as a reinsurer for Russian ships in the international market without involving Western companies.
A source said similar insurance guarantees were provided by Iranian authorities when Western insurance companies were unable to insure tankers with Iranian oil under sanctions.
Russian guarantees were likely to satisfy countries still buying Russian oil, another Western insurance industry source said, after the United States banned imports of Russian oil and the European Union agreed to gradually introduce a ban.
Most Russian oil exports, especially those from Sovcomflot tankers, are destined for Asian ports, mainly India and China, which have not banned working with Sovcomflot.
Indian authorities have already accredited Ingosstrakh as an insurance company for the transport of oil, which means that ships insured by the company can enter Indian ports.
(Reporting by Jonathan Saul and Reuters reporters; additional reporting by Nidhi Verma; editing by Veronica Brown and Edmund Blair)
Photo: Arctic tanker Shturman Albanov. Photo credit: Sovcomflot
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