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Turkey Reaches Deal With Insurers on Tanker P&I Guarantee

tanker
Tanker transiting the Bosporus, 2014 (Landa Hlauts / CC BY-NC-SA 2.0)

Published Dec 13, 2022 6:57 PM by The Maritime Executive

Turkey has reached a compromise with Western marine insurers on the language of a newly-required confirmation letter for tanker coverage in Turkish waters, confirmed top insurer Gard in a statement Tuesday. 

"Following significant engagement between the International Group of P&I Clubs (IG) and the Government of Turkey, an agreement has been reached allowing ships carrying crude oil cargoes to continue their voyages through Turkish-controlled waters," Gard said. 

According to documents provided to Reuters, Turkish officials appear to have backed down from a requirement that P&I insurers must guarantee that they will maintain tankers' coverage in any and all circumstances - including shipboard circumstances that would ordinarily void insurance cover, like sanctions violations. Writing such an iron-clad policy for the wrong cargo would force the insurer into breaching new G7/EU sanctions, which restrict insurance of Russian oil. That was a compliance risk that Western P&I clubs refused to accept, and the standoff resulted in delays for more than two dozen tankers on either end of the Bosporus. 

The newly-revised wording in Turkey's insurance letter template suggests that P&I clubs will no longer have to guarantee coverage in every circumstance, according to Reuters. Neither side provided details of the compromise, and Turkey announced only that Western insurers had agreed to its terms.

“The talks we have been holding with our counterparts have concluded with the acceptance of our new regulations that will protect the Turkish straits,” Turkey's Maritime Authority said in a statement. 

The backlog of tankers - largely carrying Kazakh oil, which is unaffected by sanctions - is now clearing, according to the maritime authority. All but three of the 22 delayed vessels have now provided the proper insurance paperwork and transited the strait, according to the agency. 

Backlogged bulkers

The insurance guarantee requirement applies solely to tankers, but dozens of bulkers have also been delayed at the Turkish Straits - for a different reason. 

The Black Sea Grain Initiative for the export of Ukrainian agricultural commodities was renewed in mid-November, but it has been moving slowly, according to the UN coordinating center behind its operations. 

The initiative requires joint inspections by Russian, Ukrainian, Turkish and UN representatives, and the limited number of teams has slowed the clearance process to a crawl. When Russia quit the initiative and withdrew its representatives, the remaining partners formed up 10 teams and inspected 40 outbound ships in one day; in the weeks since Russia resumed involvement, the count has fallen off, and between one and nine outbound vessels are being processed daily. 

https://www.un.org/en/black-sea-grain-initiative/information-note-30-october-2022

As of Monday, 82 bulkers were in Turkish waters and awaiting inspection for inbound or outbound voyages, according to the UN Joint Coordination Center.