Three Russian firms get approval to provide marine insurance cover to tankers

New Delhi: Three Russian companies have received approval from the Indian government to provide marine insurance cover to tankers, according to a Directorate General of Shipping order.

The three Russian companies are Alfastrakhovanie PCL, Sogaz Insurance and VSK Insurance. Earlier, Russia's fourth largest insurer Ingosstrakh had received approval from the government to provide marine insurance coverage to oil tankers

The approval will facilitate tankers carrying Russian crude oil to India amid a ban imposed by the European Union on insurance, trade finance, and other maritime services by EU companies for carrying Russian crude oil to any location.

The approval to Alfastrakhovanie PCL, Sogaz Insurance Co. and VSK Insurance is valid till February 20, 2025, while approval to Ingosstrakh is valid till February 20, 2029.

Marine insurance cover protects against loss or damage of ships, cargo, terminals and other liabilities arising out of transport of crude oil.

Earlier this month, two senior US treasury officials visited India to urge New Delhi to maintain the implementation of the oil price cap aimed at limiting profits to Russia, while also promoting stable global energy markets.

Following Russia's February 2022 invasion of Ukraine, the G7 nations, the European Union, and Australia jointly implemented a price cap. This cap prohibits the utilisation of Western maritime services, including insurance, flagging, and transportation, for tankers transporting Russian oil priced at or above $60 per barrel.

In 2023, Russia emerged as India's top oil supplier. India has strong economic and defence ties with Russia.

In shipping, third-party liabilities arising from operating ships such as oil pollution, wreck removal and damage to port property are commonly referred to as protection and indemnity (P&I) insurance.

Currently, such third-party risks are insured with the International Group of Protection and Indemnity Clubs (IG Clubs), a 13-member group based in London that provides liability cover to about 95 per cent of the world's ocean-going ships by capacity (tonnage), placing a $1-billion limit on individual claims that involve pollution damage and wreck removal.

The Merchant Shipping (Regulation of Entry of Ships into Ports, Anchorage and Offshore Facilities) Rules, 2012, which took effect in April 2012, makes it mandatory for foreign ships of 300 gross tonnage or more, entering the country's port to hold a valid third-party liability cover against maritime claims.