Jonathan Saul

(Reuters) – Global insurers are expected to receive multiple marine insurance claims from ships damaged or lost as the conflict in Ukraine spills over into sea lanes, insurer Allianz (ETR:) Global Corporate & Specialty (AGCS) said in a report on Tuesday.

Since the Russian invasion began on February 24, two seafarers were killed, and six merchant ships have been hit with projectiles. Two of these vessels were sunk.

London’s marine insurance companies have declared the Black Sea, Sea of Azov and other high-risk areas to be highly risky. This has caused the price of shipping to the area to rise to record levels. There is an extra premium for each voyage as well as annual war coverage.

In its annual Safety & Shipping Review, Allianz group’s leading subsidiary AGCS said insurers could also face claims arising from vessels and cargo blocked or trapped in Ukrainian ports and coastal waters as Russia’s navy controls access points.

Justus Heinrich, AGCS said that the insurance industry will likely see many claims from war-related policies for vessels lost or damaged by seamines, rocket strikes and bombings in conflict areas.

Moscow called the Ukraine action a “special operations” while its attempts to establish a maritime corridor were rebuffed by calls for U.N.-led channels to permit hundreds of vessels and seafarers to depart without fear of being struck.

Risk modelling firm PCS reported last month that industry-wide marine losses could amount to between $3 and $6 billion. A working estimate is $5 billion.

AGCS stated that a wider ban on Russian oil could increase the price and availability of bunkerfuel under Moscow’s sanctions.

Heinrich stated, “In the long-term we might see a lack of bunker fuel. More vessels may have to switch to noncompliant or understandard fuels. That could cause machinery breakdown claims.”

According to the study that looked at reported shipping accidents and deaths for ships over 100 tons, 54 ships lost worldwide in 2021 compared to 65 one year ago. This represents a 57% decrease over the previous 10 years.

AGCS stated that such progress is a result of the increasing focus on safety over time, through training and safety programmes, and improved ship design and technology, as well as regulation.