RBC: Russian insurers effectively stop covering war risks for cargo ships in Azov, Black Seas

Russian insurers have effectively stopped covering war and terrorism risks for cargo ships in the Sea of Azov and the Black Sea, the Russian business news outlet RBC reported, citing sources in the country’s shipping and insurance industries.

Russia’s Defense Ministry issued a navigational warning in July covering July 12 to July 18, citing threats from Ukraine of attacks and terrorist acts in the two seas. Russian insurers then sent notices to market participants saying that any area declared temporarily dangerous “according to current navigational warnings” would be excluded from coverage, meaning a ship’s insurance contract does not apply while it is inside those zones.

Foreign insurers, meanwhile, have raised prices for covering military risks in the two seas. Ivan Rybakov, head of the insurance practice at MEF Legal, said shipowners insure their civil liability to third parties, while insurance companies reinsure those risks in London through the International Group of P&I Clubs. “And at the moment, the reinsurance service for this region is very expensive,” he said.

“Based on a consensus in the insurance market, the waters of the Black Sea and the Sea of Azov remain firmly on the list of high-risk zones designated by the Joint War Committee of the London insurance market,” Rybakov added.

Boris Borisov, general director of the consulting firm Doctor of Law Kolesnikov and Partners, said the London market Lloyd’s has officially placed the Sea of Azov and a large part of the Black Sea on its list of so-called Listed Areas — zones excluded from standard war-risk coverage. As a result, any standard insurance policy automatically stops covering drone damage once a ship enters those waters.

Ukrainian attacks on ships in the Black Sea have grown more frequent in recent months. Overnight on August 1, Ukrainian naval drones attacked the container ship Yanina, owned by the Fesco company, a subsidiary of Russia’s state nuclear energy corporation Rosatom. The Armed Forces of Ukraine’s Unmanned Systems Forces command regularly reports striking Russian vessels and describes them as legitimate targets.

Russia, in turn, has attacked port infrastructure in Odesa and ships in Ukrainian waters. Turkey, concerned about the attacks from both sides, called on Russia and Ukraine on August 4 to take steps to ensure the safety of shipping in the Black Sea.