Russian reinsurer backs companies to get Indian marine insurance license
Russia’s state reinsurer has provided financial support to three Russian insurance companies, helping them gain Indian approval to provide marine insurance coverage to tankers, two sources said, as Moscow seeks to ease trade with India amid Western sanctions.
A series of sanctions by the US and allies against Moscow over its invasion of Ukraine, along with tighter scrutiny of Russia’s oil trade, have all but cut Russia off from the global network of service providers such as insurers and brokers.
Russian companies Sogaz Insurance, Alfastrakhovanie and VSK Insurance have joined Ingosstrakh as insurers approved by India to provide marine insurance cover, an order on the Indian shipping regulator’s website showed.
India approved the three new insurers after the Russian National Reinsurance Company (RNRC) provided a financial guarantee, the two sources with direct knowledge of the matter said.
This is the first time that RNRC’s role in providing financial support to the three Russian insurers to get accredited in India has been reported.
“With the support of the Russian National Reinsurance Company, a wholly owned entity of the Russian government, these insurers can boast robust financial support and stability,” one of the sources said.
Insurance is essential for maritime transport, especially for oil cargoes that require the highest safety standards due to the risk of leaks.
Representatives from Sogaz Insurance, Alfastrakhovanie and VSK Insurance did not respond to requests for comment. A representative for the RNRC declined to comment.
RNRC, controlled by Russia’s central bank, was sanctioned by the UK and European Union in 2023.
India’s Directorate General of Shipping did not respond to an email from Reuters seeking comment.
“Ingosstrakh is not expanding its maritime insurance business to India. Our relationship with India in the maritime insurance sector spans more than 57 years, dating back to 1967 when we opened our office in Mumbai,” an Ingosstrakh spokesperson said in an emailed statement mail.
The three Russian insurers, which specialize in protection and non-life insurance (P&I) coverage, are not part of the Europe-based International Group, which consists of twelve so-called P&I clubs.
The IG says it provides marine liability coverage for approximately 90% of the world’s maritime tonnage.
“Adequate procedure has been followed (by India’s shipping regulator) to include these new entities in the list of non-IG companies that can offer insurance,” one of the two sources said.
MAJOR SUPPLIER
The Group of Seven (G7), the European Union and Australia have imposed a price ceiling of $60 per barrel on Russian oil if Western services such as shipping and insurance are used.
The aim is to put pressure on Russian oil revenues while keeping supply to the market stable.
Russia has emerged as a major oil supplier to India, the world’s third-largest oil importer and consumer, as its oil is sold at a discount after Western countries halted purchases from Moscow.
The Indian government has said the country is adhering to United Nations sanctions and not adhering to sanctions imposed by any other country.
A source from one of India’s refineries said banks are very strict in clearing payments for Russian oil to ensure the price of Russian crude is below the $60 per barrel mark.
The price cap mechanism bans Western companies from offering maritime services, including financing, insurance and shipping of oil sold above the cap.
“Why would Russia give up its insurance premium income and give it to Western insurers? It is not a small amount,” said this source.
“Even if Russia is legally allowed to use Western services, they don’t want to use them,” he said.
“This also means that they must share details about their dealings with the (Western) service providers.”
Indian refiners buy Russian oil on a delivered basis, usually from traders, to avoid liability arising from sanctions before unloading oil cargoes.
The accreditation of the three Russian entities is valid until February 20 next year, but the authorization for Russia’s Ingosstrakh has been extended by five years until February 20, 2029, an order on the website of India’s Directorate General of Shipping showed.
First print: April 25, 2024 | 11:48 PM IST