Protection and indemnity provider West of England has warned it could be blocked from paying out in the event of a collision involving a vessel covered by sanctioned Russian insurer Ingosstrakh.
The insurer also cautioned that it would be severely restricted from covering members for planned operations, such as ship-to-ship oil transfers, linked to Ingosstrakh-covered ships.
The guidance published on Monday comes after the British government blacklisted Ingosstrakh in June for carrying on business of “strategic significance” for Russia.
It was the first major move by Western regulators against the maritime insurance sector but sparked concerns that the regulations could impact insurance payouts.
The blacklisting followed complaints earlier this year by the 12-strong International Group of P&I Clubs that some 800 tankers had quit the group because of the restrictions and complexities of Western sanctions and the oil price cap.
Western sanctions have steadily turned the screw on the shadow tanker fleet hauling sanctioned oil cargoes, forcing operators who want to remain in the Russian trade to look outside of the International Group, which covers about 87% of oceangoing tonnage.
Ingosstrakh picked up some of that coverage as Russia built a shadow fleet and associated services to haul oil to major customers out of the reach of Western enforcement.
The listing in June prevented a UK person — or a UK-linked business such as West — from doing business with the insurer.
Experts warned that the blacklisting could also block Ingosstrakh payments in the event of an oil spill in Europe.
Licences covering payouts would be granted on a “case-by-case” basis and decided by the UK sanctions regulator, the Office of Financial Sanctions Implementation, according to guidance.
West has pursued a diversified strategy since 2020 and offers members other insurance products, including hull and machinery cover.
In the case of a collision with an Ingosstrakh-covered vessel, members are “advised that the club may need to seek a licence to pay or reimburse any resulting liabilities”, said West’s deputy head of claims, Tim Davies, in the circular published on Monday.
“Such a licence may take time to obtain if indeed it can be obtained at all.”
The warning over STS transfers followed guidance earlier this year from West that there would be no cover from any activity that risked the club “being exposed to sanctions”.
Malin Hogberg, the former chair of the International Group’s sanctions committee, told TradeWinds in June that a payout by Ingosstrakh in the event of a spill involving one of its covered vessels was unlikely because of the UK listing.
Ingosstrakh said it could take the UK government to court over the blacklisting. The Moscow-based company said it was unclear why it had been targeted since it said it complied with all legal and sanctions rules.
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