Ukraine calls on marine insurers to withdraw Russian coverage

The Ukrainian government has asked international marine insurers to stop all dealings with shipping companies carrying Russian fossil fuels in a bid to intensify pressure on Vladimir Putin’s regime.

Oleg Ustenko, Chief Economic Advisor to Ukrainian President Volodymyr Zelenskiy, urged a group of shipping insurance specialists to withdraw coverage in a bid to reduce cash flowing into Russia from international buyers of its energy.

“On behalf of President Zelenskiy, and the Ukrainian people, in this existential moment for our nation, we’re asking you to terminate all business dealings with the Russian fossil fuel industry, to cut off the flow of cash which is financing the mass murder of innocent people,” Ustenko said in a letter dated March 24. Ustenko confirmed the contents of the letter to Bloomberg News.

The letter was sent to the International Group of P&I Clubs, a collection of insurance associations which say they provide marine liability coverage for around 90% of sea-bound cargo. The club’s members have insured 363 vessels carrying oil, gas and coal from Russian ports since the invasion of Ukraine began on Feb. 24, the letter said.

Russia’s fossil fuel sales remain a key source of foreign capital for its government, although dozens of international countries have said they will work towards reducing or stopping imports to further squeeze Putin’s regime.

An insurance boycott would not stop tanker owners, Nick Shaw, chief executive officer of the International Group of P&I Clubs, said in a reply seen by Bloomberg. “There is likely to be a limited short-term hiatus while those shipowners who decide to participate in the trade find alternative insurance arrangements,” he wrote. Shipowners could choose a non-IGP&I group member to provide insurance cover including firms in Russia, Shaw added.

Shaw also said his members were responsible for their own underwriting risks. “While collective decision are taken in response to legal requirements, duties and obligations, the Clubs may consider individually ways in which they may lawfully address the important questions that you have raised,” he wrote.

“I can confirm that we are in ongoing discussions with Ukraine, helping them to understand how P&I cover works,” Shaw said in an email to Bloomberg.

Cargo ships insured by IGP&I members unloaded 39.3 million tonnes barrels of crude oil, 473,000 tonnes of liquefied natural gas, and 2.82 million tonnes of coal picked up from Russian ports in the four weeks after fighting broke out, the letter said. Global Witness, a London-based non-governmental organization, worked with the Russian Tanker Tracking Group – a group of Ukrainian Government representatives, academics and technical experts – to help compile the research.

Coca-Cola Co., Goldman Sachs Group Inc., JPMorgan Chase & Co. and McDonald’s Corp. are among international firms to have pulled back or halted business since the war began amid intense political and social pressure on firms to sever ties with Russia. UBS Group AG outgoing Chairman Axel Weber on Tuesday said he saw no future for many international banks in Russia even if there’s a cease-fire.

“Russia has put itself outside the international community and this will have a pretty long-dated consequence,” Weber said in an interview with Bloomberg Television.

–With assistance from Daryna Krasnolutska.