Russian oil shipments to be shut out of London’s insurance market
SHIPS carrying Russian oil exports are to be frozen out of London’s vital insurance market in a significant blow to the Kremlin.
The Government and the EU have jointly banned crude cargo from Russia in a move that will restrict Moscow’s ability to sell oil around the world and reduce the billions of pounds of revenue it earns every week from sales.
The move, which was first reported by the Financial Times, will shut ships that export Russian oil out of Lloyd’s of London, the world’s oldest and most important insurance market.
About 95pc of the world’s tanker liability coverage is arranged through International Group of P&I Clubs, a London-based insurance organisation.
It comes after Ursula von der Leyen, president of the European Commission, said that EU leaders had agreed “a ban on insurance and reinsurance of Russian ships by EU companies”.
An announcement by the Government is expected imminently.
A spokesman for the insurance market said: “Lloyd’s supports and remains focused on the delivery of a global sanctions regime against the Russian state.
“We are working closely with UK and international regulators and governments to implement the sanctions.”
Meanwhile, Vladimir Putin’s invasion of Ukraine is forcing Lloyd’s of London insurers to stop providing cover that protects businesses from operating in countries at risk of war or coups.
WRB Underwriting, the Lloyd’s arm of listed American giant WR Berkley Corporation, has quit the “political violence” and “political risk” markets in what experts said was a significant moment for the 336-year-old insurance market. It is believed to be the first Lloyd’s underwriter to stop offering such vital insurance cover as a result of Russia’s war with Ukraine.
Lloyd’s, based in the heart of the City of London, has a global reputation for providing specialist insurance for some of the world’s biggest deals and companies. Underwriters would typically seek to offload some “risk” – potential payouts in the event of a claim – to their rivals and specialist reinsurance companies such as Munich Re or Swiss Re.
But the reinsurance market for political violence or political risk cover is said to have stalled amid fears about a glut of claims related to the Ukraine war, according to Insurance Insider, which first reported WRB’S exit.
Although WRB is a comparatively small player in the Lloyd’s market for this type of insurance, experts suggested it heralds a wider trend. Bruce Hepburn, chief executive of Hepburn, which helps companies with large claims, said: “This type of cut in cover availability is a huge development.”