THE European Union will this week roll out its planned ban on the insurance or reinsurance of Russian ships, as part of a package designed to wean the bloc off dependence on Russian oil exports.

The move — one aspect of Brussels’ ongoing retaliation against Russia for its incursion into Ukraine in February — was confirmed at a press conference given by European Commission president Ursula von der Leyen on Monday night, with no additional details on offer.

Given that her intentions were flagged up several weeks ago, the proclamation itself did not come as any real surprise, marine insurance sources told Lloyd’s List today.

A leaked draft has been knocking around for some time and has clearly been widely read. But insurers nevertheless insisted on the need to see the small print when the full proposals are published, probably on Wednesday or Friday this week.

“The primary question that needs answering is what is meant by a Russian vessel,” said one underwriter.

“Russian flag? Russian class? Owned by Russians? Owned by non-Russians who are domiciled in Russia? Chartered by Russians?

“Until we get that clarification and a definition in the regulation, we can’t say how this sanctions package will affect us.”

Until this question is answered, even back-of-an-envelope calculations of how many ships may be involved, and what the likely dollar hit to marine insurance premiums could be, are not even possible.

The assumption is that there will be a wind-down period, probably of about six months, in line with earlier rounds of sanctions.

The UK remains a leading player in both the protection and indemnity insurance and hull niches. Seven of the 13 marine mutuals affiliated to International Group of P&I Clubs are based in Britain, as are the Lloyd’s and London companies markets.

As a result of Brexit, UK-based marine insurers are not subject to EU decisions as such. But almost all of them insure EU owners’ tonnage through entities within the EU, and will need to ensure compliance.

In addition, there is widespread anticipation that the UK will institute measures parallel to the latest EU sanctions, if only to maintain a western united front against Russian aggression.

Big Norwegian insurers such as Gard and Skuld are also outside the EU, although it is almost automatic for the Norwegian government to require compliance with EU sanctions.

Protection and indemnity insurance cover — essentially, liability insurance for ships — is effectively a ticket to trade. Few charterers would be willing to hire uninsured tonnage, and few port authorities would allow such vessels port access.

Preventing UK and Nordic marine mutuals from providing it would certainly make life harder for Asian or other owners that wanted to do the business.

The obstacles stopping them from doing are theoretically not insurmountable, but would be hard to overcome in practice.

Providing insurance for vessels operated by Kremlin-owned tanker giant Sovcomflot is already prohibited by both the EU and UK.

Of the five clubs known to have covered Sovcomflot ships prior to the Ukraine situation, North of England, UK and West have all confirmed that they no longer do so.

Gard and Skuld have declined to comment publicly, but are widely understood to have adopted the same stance.

There has been some speculation that Sovcomflot would seek a workaround by getting a first line of cover from Russian insurer Ingosstrakh, which already has a substantial book of domestic marine business, backstopped for the excess by the Russian state.

However, there is no indication that this has yet happened. Alternatively, fixed premium cover is available from non-IG commercial insurers. But none of them come even close to the $2bn-plus cover limits made possible by the IG pool scheme.

Mike Salthouse, chair of the IG’s sanctions subcommittee and claims director at North, commented: “We will see what the EU is proposing. If it follows what is said in the press, then insurers subject to EU jurisdiction will no longer be able to support trade out of Russia.

“The current legislation is already complicated. We’re going backwards and forwards with lawyers, working out what is caught and what isn’t. The sixth round of sanctions will make things clearer, which is helpful.”

The interesting thing now is what will happen to consignments, particularly of crude, that will no longer head to Europe, and whether countries such as China or India will buy them instead, he added.

“It would be wrong to assume you can’t carry oil from Russia to China if there is a political will to do that. The fact that [ships] won’t have insurance in western markets, no access to western financial services, is neither here nor there.”

Neil Roberts, head of marine and aviation at the Lloyd’s Market Association, pointed out that Lloyd’s requires all risks located in the European Economic Area to be written by Lloyd’s Insurance Company and not by Lloyd’s underwriters.

LIC — popularly known as Lloyd’s Europe — is legally domiciled in Belgium, and thus will automatically be required to come into line with any applicable EU regulations.

“Insurance is binary, it’s either forbidden or it isn’t. Understanding whether it is forbidden or not is where the problem comes, and there are grey areas,” said Mr Roberts.

“I anticipate there will be some sort of wind-down period. It won’t be instant or immediate.”