As Moscow tries to ease trade with India in the face of Western sanctions, three Russian insurance companies have received financial support from Russia’s state-owned reinsurer, enabling them to obtain Indian approval to offer marine insurance coverage to tankers, according to two sources.

Due to a series of sanctions imposed by the United States and its allies on Moscow for its invasion of Ukraine, as well as increased oversight of Russia’s oil trade, Russia is essentially cut off from the world’s network of service providers, including brokers and insurers.

According to a notice published on the website of the Indian shipping authority, Russian firms Sogaz Insurance, Alfastrakhovanie, and VSK Insurance have joined Ingosstrakh as insurers recognised by India to offer marine insurance coverage.

According to two people with firsthand knowledge of the situation, India authorised the three new insurers following the provision of a financial guarantee by the Russian National Reinsurance Company (RNRC).

This is the first time that the RNRC’s assistance in helping the three Russian insurers obtain Indian accreditation has been made public.

“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,” according to a source.

Insurance is a must for shipping by sea, especially when carrying oil, which has the greatest safety requirements because of the possibility of spills.

On Thursday, mining behemoth BHP made an almost $39 billion acquisition offer for Anglo American, creating the largest copper miner in the world.

Representatives from Alfastrakhovanie, Sogaz Insurance, and VSK Insurance did not reply to requests for comments. A spokesman of the RNRC declined to comment.

In 2023, the UK and the EU imposed sanctions on RNRC, which is under the supervision of the Russian central bank.

An email from Reuters asking for comments was not answered by India’s Directorate General of Shipping.

“Ingosstrakh is not planning to increase its operations in India for maritime insurance. When we first established our office in Mumbai in 1967, we began a 57-year partnership in the marine insurance sector with India, an Ingosstrakh representative stated via email.

The International Group, a group of twelve so-called P&I clubs established in Europe, does not include the three Russian insurers that specialise in protection and indemnity (P&I) insurance.

According to the IG, it covers marine responsibility for almost 90% of the tonnage of oceangoing vessels worldwide.

“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,” according to one of the two people.

A $60 per barrel price restriction on Russian oil has been set by the Group of Seven (G7), the European Union, and Australia, provided that Western services like shipping and insurance are employed.

The objective is to reduce Russia’s oil earnings while maintaining a steady supply of oil on the market.

Since Western countries stopped buying oil from Moscow, Russia has become a significant supplier of oil to India, which is the third-largest oil importer and user in the world. Oil from Russia is supplied at a discount.

According to the Indian government, the nation does not adhere to sanctions imposed by other nations and instead abides by those set forth by the UN.

According to a source from an Indian refiner, banks enforce stringent procedures when processing payments for Russian oil to guarantee that the price of Russian crude remains below the $60 per barrel ceiling.

Western businesses are prohibited from offering nautical services, such as financing, insurance, and shipping, for oil sales that exceed the price cap due to the price cap mechanism.

“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.”

In order to avoid any obligation resulting from sanctions prior to the discharge of oil cargoes, Indian refiners primarily purchase Russian oil on a delivered basis from dealers.

The authorization for Russia’s Ingosstrakh has been extended by five years until February 20, 2029, according to an order posted on the website of India’s Directorate General of Shipping. The accreditation of the three Russian firms is valid until February 20 of the following year.

(Adapted from Business-Standard.com)