Russia’s state-owned reinsurer has given financial backing to three Russian insurance firms, allowing them to get Indian approval to provide marine insurance cover to tankers, two sources said, as Moscow seeks to facilitate trade with India amid Western sanctions.

 

A raft of sanctions by the U.S. and allies against Moscow over its Ukraine invasion, along with tighter scrutiny of Russian oil trade, has almost 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 for providing marine insurance cover, an order posted on Indian shipping regulator’s website showed.

 

India has approved the three new insurers after Russian National Reinsurance Company (RNRC) provided a financial guarantee, the two sources with direct knowledge of matter said.

 

This is the first time RNRC’s role in providing financial backing to the three Russian insurers to get accredited in India has been reported.

 

“With the backing of the Russian National Reinsurance Company, a wholly-owned entity of the Russian Government, these insurers boast robust financial support and stability,” one of the sources said.

 

Insurance is essential for maritime transport, particularly oil cargoes that require the highest safety standards due to the risk of spills.

 

Sogaz Insurance, Alfastrakhovanie and VSK Insurance representatives did not respond to requests for comment. An RNRC representative declined to comment.

 

RNRC, controlled by the Russian central bank, was sanctioned by the UK and European Union in 2023.

 

India’s Directorate General of Shipping did not respond to a Reuters email seeking comments.

 

“Ingosstrakh is not expanding its maritime insurance activities to India. Our relationship with India in the marine insurance industry has spanned over 57 years, dating back to 1967 when we opened our office in Mumbai,” an Ingosstrakh spokesperson said in an emailed statement.

 

The three Russian insurers, which specialise in protection and indemnity (P&I) insurance coverage, are not part of the Europe-based International Group, which is made up of twelve so-called P&I clubs.

 

The IG says it provides marine liability cover for approximately 90% of the world’s ocean-going shipping tonnage.

 

“A due procedure has been followed (by the Indian shipping regulator) for including these new entities in the list of non-IG companies that can provide insurance,” one of the two sources said.

 

MAJOR SUPPLIER

The Group of Seven (G7), the European Union and Australia have imposed a $60 per barrel price cap for Russian oil if Western services such as shipping and insurance are used.

 

The aim is to squeeze Russia’s oil revenues while keeping the supply to the market stable.

 

Russia has emerged as a major oil supplier to India, the world’s third biggest oil importer and consumer, as its oil is sold at a discount after Western nations halted purchases from Moscow.

 

The Indian government has said that the country abides by United Nations sanctions and does not follow those imposed by any other country.

 

A source from one of India’s refiners said banks are very strict in clearing payments for Russian oil to ensure that Russian crude is priced below the $60 per barrel cap.

 

The price cap mechanism bans Western companies from providing maritime services, including financing, insurance, and shipping for oil sold above the cap.

 

“Why would Russia like to forgo its revenue from insurance premiums and give it to the western insurers. It is not a small amount,” this source said.

 

“Even if Russia is legally allowed to use Western services they don’t want to use them,” he said.

 

“This also means they have to share details of their dealing with the (Western) service providers.”

 

Indian refiners buy Russian oil on delivered basis mostly from traders to avoid any liability arising due to sanctions before discharge of oil cargoes.

 

The accreditation of the three Russian entities is valid until Feb. 20 next year, but authorisation for Russia’s Ingosstrakh has been extended by five years to Feb. 20, 2029, an order posted on the website of India’s Directorate General of Shipping website showed.

 

First Published: Apr 25 2024 | 11:48 PM IST