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Allianz Global Corporate & Specialty (AGCS) has released a report stating that marine insurance claims are expected to rise due to the Russia-Ukraine conflict.
The Russian invasion of Ukraine has led to the loss of life and vessels in the Black Sea and disrupted trade, the report said.
Other than the sanctions, the shipping industry is facing challenges to day-to-day operations such as knock-on effects for the crew, the rising cost of fuel and the potential for growing cyber risk, it added.
AGCS global product leader for marine hull Justus Heinrich said: “The insurance industry is likely to see a number of claims under specialist war policies from vessels damaged or lost to sea mines, rocket attacks and bombings in conflict zones.
“Insurers may also receive claims under marine war policies from vessels and cargo blocked or trapped in Ukrainian ports and coastal waters.”
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A ban on Russian oil could potentially push ship owners to look for alliterative fuel, which could be of substandard quality.
The use of such fuel could lead to machinery breakdown claims in future.
“The evolving range of sanctions against Russian interests presents a sizeable challenge. Violating sanctions can result in severe enforcement action, yet compliance can be a considerable burden,” the report added.
Last month, the marine insurance market of London added Russia’s waters to the list of high-risk areas.
Ships sailing through high-risk areas are required to inform underwriters and pay an additional premium for insurance cover.