Turkey’s decision to ban the passage of ships through the Bosphorus without P&I insurance may complicate food supplies – specialized companies will not take risks and cooperate with any carriers from the Russian Federation. Such fears in an interview with Izvestia were expressed in the Russian Grain Union (RGU). Ankara intends to introduce a new law on December 1. More than 95% of P&I’s world tanker fleet is insured by Great Britain, which from December 5 will stop working with ships carrying Russian oil. The Russian-Turkish Business Council suggests that Ankara may create a new insurance company that will not depend on Western sanctions. In the Turkish parliament, Izvestia was assured: the country will definitely not make decisions to the detriment of trade with Russia .
From December 1, Turkey closes the passage through the Bosphorus of ships without P&I insurance. The ban will primarily affect tankers carrying oil , writes Bloomberg, citing a circular from the Turkish Ministry of Transport. Carriers will be required to provide a letter from their insurance company stating that P&I coverage is available for the particular flight and cargo. This term stands for “insurance protection and indemnification”, it stipulates liability to third parties. It is provided by a special P&I club.
Such insurance provides coverage for perpetual risks that traditional companies do not want to insure. For example, damage to cargo during transit, “war risks”, and environmental hazards such as oil spills and pollution.
UK – leader in P&I insurance : the kingdom provides 60% of the world’s coverage. The international group P&I Clubs is based in London and provides insurance for 95% of the world’s tanker fleet. From December 5, all insurance companies in the UK will Russian-oil-and-oil-products/uk-ban-on-Russian-oil-and-oil-products”>prohibited
. By doing so, the Ministry of Finance of the Kingdom, in fact, will block carriers from the Russian Federation from accessing the largest insurance market in the world – Lloyd’s. From February 5, 2023, they plan to expand the ban on oil products from the Russian Federation.
This measure should not affect food , however, as RGU President Arkady Zlochevsky clarified to Izvestia, this may make it even more difficult for any carriers from the Russian Federation to obtain insurance . Which will ultimately affect the cost of goods.
— Russian companies still have insurance, — explained the head RZS. – But they became more expensive, and there were problems with the conclusion of contracts . If Turkey establishes that only certain types of insurance can pass through the Bosporus, then this will greatly increase the damage for all Russian companies, including those in the agricultural sector .
Transportation insurance in the Black Sea region is already expensive. In April, the underwriters charged up to 10% of the vessel’s value as an asset as an additional “war risk” premium. These prices may still rise after Turkey makes a decision on the Bosphorus, Arkady Zlochevsky concluded.
insurance authorities from clubs in friendly countries (for example,