The Japan P&I Club has warned members that its protection and indemnity cover for Russian cargo shipments outside the European Union will be severely limited.
EU sanctions allow certain Russian cargoes, including coal, to be transported to third countries outside the 27-nation bloc, but they cannot be insured by EU-regulated underwriters.
Japan P&I, as a non-EU insurer, clarified that it would be able to provide P&I cover for such shipments, but only within its own retention of $10m.
Claims above that figure would enter into the International Group of P&I clubs pooled insurance cover, with claims over $100m handled by the commercial reinsurance market.
All the International Group members, and their collective reinsurers, have EU-based entities that are regulated in the region.
Japan P&I said: “There remains uncertainty whether any other club or reinsurer would be able to pay any reinsurance money to us for losses or damage concerning the carriage of ‘subject goods’ from Russia to third countries.”
The club also buys reinsurance in the international markets within its own $10m retention, which may also come under EU sanctions.
The insurer stressed that the clarification of its position on sanctions should not be taken as an indication that it is encouraging the carriage of Russian cargoes.
“We believe it is important to respect the objectives of sanctions against Russia by the EU, USA and other countries in light of the changed international situation. Our interpretation of the insurance coverage situation does not imply that we are encouraging members to transport ‘subject goods’ from Russia to third countries,” it said.
Under the Japan P&I’s rules, if a shipowner member’s claim cannot be met because of sanctions — both within or above the club’s own retention — it would have to meet the cost itself.
“Members themselves will have to bear the shortfall,” it warned.
In a constantly changing sanctions environment, the club said there can be no guarantees over cover: “We cannot affirm that any club or reinsurer can provide coverage in the event of loss or damage concerning the carriage of ‘subject goods’ from Russia to third countries.”
