Efforts on the part of insurers to cut their links to Russia could put a stranglehold on Russian energy exports, unless the Kremlin fills the void, analysts have said.
The push amongst Western insurance companies to distance themselves from Russian clients, to ensure they are not in breach of Western sanctions, could severely impact the Federation’s oil and gas exports, if Russian tankers are unable to get insured elsewhere.
The sanctions could undermine the Kremlin’s efforts to send oil and gas – in the form of LNG – to Asia, due to the core role Lloyds of London and other UK, US and EU insurers play in the marine insurance market.
As ships are required to be covered under protection & indemnity (P&I) insurance policies, the insurance sector’s exodus could hasten the downfall of the export industry that plays a vital role in the Russian economy, in providing around 40 per cent of total government revenue.
Last month, insurance expert Neil Roberts told MPs that insurers have been erring on the side of “extreme caution” in their dealings with Russian linked clients, amid fear of the “extreme” penalties they could face.
The Lloyds exec said the UK’s sanctions rules are having a “profound” impact on London insurers, as he warned that many underwriters are refusing to work with any Russian clients at all.
Earlier this month, the EU also set out plans to ban European insurers from covering ships carrying Russian oil, in line with efforts to undermine Russia’s energy exports. The EU’s plans come as research shows Chinese and Indian buyers have begun picking up cheap cargoes of Russian oil that have been turned away by the West.
The efforts to block Russian firms from taking out insurance policies could however be undermined if Russian insurers, or insurers from other countries, are willing and able to step in. Analysts warned that these insurers could receive support from Moscow and Beijing.