Sanctions are increasingly complex today, due to the Ukraine war. P&I Clubs are increasingly on point sorting these out for carriers and shippers.
P&I Clubs form risk pools to insure carriers on specific voyages, covering such risks as damage, war risks, and environmental damage.
The annual joint conference of the Hellenic American Chamber of Commerce included several P&I club members and attorneys who represent them and others.
I especially noted the comment by Nikolai Ivanov, of Skuld.
“being in between the sanctions authorities, and the practical part of the shipping industry…we act as a buffer between the two and have to effectively police up and down the sanctions chain”Nikolai Ivanov, Skuld, in Navigating the new world of sanctions
He points out that Skuld had to deny coverage to some old customers as a result of the sanctions. His remark clarifies that the P&I clubs are on the front lines of sanctions enforcement. No one else is allocating substantial resources to it.
What can happen if this enforcement mechanism fails? The result could be a kind of free-for-all in which sanctions for the Ukraine war, for instance, are no longer of much use. There have been attempts to circumvent the major clubs, for instance, by Russia attempting to provide similar insurance. I don’t think anyone believes that Russian entities could do this on a very large scale.
It appears most of the issues are in the energy transport and bulk carrier transport areas. Extreme shortages in these areas could be the trigger for massive violations of the sanctions, possibly without insurance, with only shadow coverage, or with insurers looking the other way. This wouldn’t be a good situation.
So far the insurers have been able to cope with the sanctions increases.
Barry Parker | Feb 14, 2023Navigating the new world of sanctions
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