India Approves 3 Russian Firms To Provide Marine Insurance Cover To Tankers

India has approved three Russian insurance companies to offer marine insurance coverage to tankers in an attempt to get over European Union bans on maritime services linked to Russian crude oil.

This initiative is a crucial step toward enabling the transit of Russian crude oil to India in the midst of rising geopolitical tensions.

The approval, announced in a Directorate General of Shipping decision, allows Alfastrakhovanie PCL, Sogaz Insurance, and VSK Insurance, three major Russian insurers, to provide marine insurance coverage for tankers transporting Russian crude oil into Indian ports.

This action follows the Indian government’s earlier acceptance of Ingosstrakh, Russia’s fourth-largest insurer.

The Russian National Reinsurance Company (RNRC), a state-owned reinsurer, played a vital role in providing financial support to these insurers, allowing them to be accredited by Indian authorities.

These insurers now have the financial security they need to operate in the Indian market because of the RNRC guarantee.

The presence of the RNRC is crucial because it highlights Moscow’s efforts to strengthen trade connections with India in the face of increased scrutiny and sanctions imposed by Western countries in reaction to Russia’s actions in Ukraine.

Despite facing penalties from the United Kingdom and the European Union in 2023, RNRC’s support demonstrates Russian financial institutions’ determination to deal with foreign problems.

Marine insurance is critical to guaranteeing the safety and security of marine transit, especially for oil cargoes that require severe risk mitigation measures to avoid spills and environmental dangers.

The accreditation of these Russian insurers offers tanker operators a credible option, minimizing the impact of EU restrictions on access to critical marine services.

While the International Group (IG) continues to dominate marine liability coverage for a substantial share of worldwide shipping tonnage, the entry of these Russian insurers broadens the market and provides new options for maritime industry stakeholders.

The Group of Seven (G7), the European Union, and Australia imposed a $60 per barrel price restriction on Russian oil, emphasizing the strategic importance of maintaining stable oil supply lines while imposing economic pressure on Russia.

India, one of the world’s top oil importers, has emerged as an important destination for Russian oil, taking advantage of lower costs amid interruptions in traditional Western markets.

Despite adhering to UN sanctions, India’s position on executing sanctions imposed by other countries is complicated.

Indian refiners, concerned about liability risks, use strict payment systems to ensure compliance with international standards when purchasing Russian oil.

The certification of these Russian insurers, valid till February 20 of next year, demonstrates India’s commitment to preserving varied and durable trading connections amid shifting geopolitical factors.

Furthermore, the authorization extension for Ingosstrakh demonstrates Russia and India’s long-standing relationship in the marine insurance market.

As geopolitical tensions continue to impact global trade patterns, the collaboration of Indian and Russian insurers represents a strategic alignment to increase trade resilience and security in the maritime sector.

Reference: Reuters, PTI

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Source: Maritime Shipping News