Starting from January 1, 2023, world’s biggest insurers will stop covering war risks for ships in Ukraine, Russia, and Belarus as reinsurers exit the region, Reuters reports.
P&I (protection and indemnity) clubs American, North, UK and West claim that they are no longer able to offer war risk cover for some liabilities in the region. The clubs cover around 90% of the world’s ocean-going ships.
On December 23, UK P&I Club said 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.
P&I insurance covers third-party liability claims including environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage.
The withdrawal of cover for Ukraine and Russia applies to some but not all types of policy offered by the P&I clubs.
This situation will make it harder for charterers to find insurance in the war zone, increase prices, and may mean some ships sail uninsured, Reuters’ sources say.
It was reported earlier that Japanese insurers will stop insuring ships for war damage in all Russian waters on January 1.
For reference: Before sailing through Ukrainian or Russian waters, ship owners must sign up for extra war damage insurance. These services will no longer be provided in 2023.
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