On February 15, the International Underwriting Association of London (IUA) released circular JWLA-028, expressing concern over the risks of escalating Russian-Ukrainian conflict in the Azov and Black Seas. IUA is an association of insurance and reinsurance companies operating in London and includes branches or subsidiaries of almost all major international insurance companies. Circular JWLA-028 states that according to the current IUA assessment, there is currently an “armed balance” in the region and no maritime incidents have been detected, so the circular is issued as a “precautionary measure” to prevent insurers’ “miscalculations”. The circular extends its effect on merchant shipping operations to the twelve-mile coastal zone of the Black and Azov Seas off the coasts of both Russia and Ukraine.

According to Professor Boris Babin about the JWLA-028 circular, it is a recommendation that will probably be followed by all P&I merchant shipping insurance clubs in the next quarter, and will probably be revised in the future. This will mean, adds the expert of our Association, the average increase in the amount of marine insurance at least until the summer of 2022, and hence – an increase in freight and the final value of all exported and imported goods, but the cessation of shipping will not happen. It is indicated that Russian business will currently suffer greater losses than Ukrainian, given the corresponding Russian shipping companies based in the Rostov Region and Krasnodar Territory.

It is noteworthy that in April 2021 another circular JW2021-006 was published under the auspices of the IUA, which stated that the situation in the waters of Russia and Ukraine is “position to be poised but not yet critical although there is an increased risk of detention in the Black Sea”. At the same time, circular JW2021-006 stated that any closure of the Sea of Azov to civilian vessels (whether it be a blanket closure, or prohibiting vessels with certain flags) would significantly increase the risk of prolonged detentions and then “ it would have no choice but to designate the Sea of Azov as a Listed Area”. Thus, from the point of view of the IUA and its Joint War Committee, JWC, tensions in the Black and Azov Seas have increased since 2021.