India grants approval for marine insurance cover to Russian tankers

In a significant development, the Indian government has granted approval to three Russian insurance firms to offer marine insurance cover to tankers, facilitating the transportation of Russian crude oil to India.

This move comes amidst the European Union’s ban on insurance and other maritime services for tankers carrying Russian crude oil. The Directorate General of Shipping confirmed that Alfastrakhovanie PCL, Sogaz Insurance, and VSK Insurance have received the green light, joining Ingosstrakh, Russia’s fourth-largest insurer, which had previously been approved.

The authorization for Alfastrakhovanie PCL, Sogaz Insurance Co, and VSK Insurance is effective until February 20, 2025. Meanwhile, Ingosstrakh’s approval extends until February 20, 2029.

This decision underscores India’s strategic maneuvering to ensure a steady supply of Russian crude oil despite global sanctions and restrictions following Russia’s invasion of Ukraine in February 2022.

Marine insurance is crucial for safeguarding against losses or damages to ships, cargo, and other maritime liabilities. The recent approvals by the Indian government are poised to support tankers transporting Russian crude oil to India, reinforcing the country’s energy security amidst international pressures.

Earlier this month, senior US treasury officials visited India, advocating for the adherence to an oil price cap designed by the G7 nations, the European Union, and Australia. This cap aims to limit Russia’s profits from oil sales while ensuring global energy market stability by setting a threshold of $60 per barrel for Russian oil transported using Western maritime services.

Russia became India’s top oil supplier, highlighting the strong economic and defense ties between the two nations. The provision of marine insurance by Russian companies plays a pivotal role in maintaining this relationship, especially in light of Western sanctions.

Maritime operations involve various third-party liabilities such as oil pollution and wreck removal. Traditionally, these risks are covered by the International Group of Protection and Indemnity Clubs (IG Clubs), which insures approximately 95% of the world’s ocean-going ships. However, with the new approvals, Russian insurers will now play a significant role in covering these risks for ships carrying Russian crude to India.

The Directorate General of Shipping official highlighted that VSK Insurance, Alfastrakhovanie, Sogaz Insurance, and Ingosstrakh are backed by the Russian National Reinsurance Company. This support not only ensures their financial stability but also their reliability in honoring insurance claims efficiently.

Their classification as non-International Group (IG) P&I entities underlines their importance in safeguarding Russian interests in maritime transport. By granting these approvals under the Merchant Shipping Regulation of Entry of Ships into Ports, Anchorage and Offshore Facilities Rules of 2012, the Government of India has taken a pragmatic step towards securing its energy needs while navigating through the complexities of international sanctions and regulations.