The London market Joint War Committee, which comprises underwriting representatives from both Lloyd’s and the International Underwriting Association (IUA) has added sections of the northern Black Sea to its master list of areas with an elevated likelihood of war, piracy or terrorism. Russia has been operating scheduled naval drills in the area, while its troops have been massing near the southern, eastern, northern and north-western borders.
The designation requires shipowners to notify their hull insurance underwriter in advance of any voyage to a covered area. The decision whether to insure the voyage or not, and the pricing of the coverage, remains a matter for the insurer to discuss with the owner.
The designation means that the Russian and Ukrainian waters of the Black Sea and the Sea of Azov are considered to be at a similar level of risk as for vessels in the Gulf of Guinea, the Persian Gulf, Yemen, Syria and Iran. It is the only listed region in Europe.
The JWC said that “whilst the current assessment is that there is armed balance, it was decided to issue [an advisory] as a precautionary measure,” adding that “there have been no maritime incidents but the possibility of a miscalculation is clear so the JWC have enabled notification of voyages to underwriters.”
Neil Roberts, head of marine and aviation with the Lloyd’s Market Association, said that the addition was “a precautionary notification so that insurers and shipowners will be able to properly negotiate their exposure as it develops”.
“We would be remiss if we did not advise the market now and give it the ability to react. With the increased naval activity, the possibility for a miscalculation is definitely there”, Roberts said.
Roberts said that the JWC had been scheduled to meet next month, but had convened an unscheduled meeting due to recent political and military developments. The Committee normally meets every quarter to review areas it considers high risk for merchant vessels and prone to war, strikes, terrorism and related perils.