Marine Insurance for the Northern Sea Route - Pilot Study

(By Diana L. Torrens ; INSROP Working Paper No. 1 – 1994, IV.3.3)

The report Marine Insurance for the Northern Sea Route constitutes a preliminary study by the Fridtjof Nansen Institute (FNI) within the framework of its International Northern Sea Route Programme (INSROP). Plans are underway for the research to be published (in book form) within three to five years. It is one part of a major comprehensive, multidisciplinary research effort encompassing: natural conditions and ice navigation; environmental factors; trade and commercial shipping aspects; and political, legal and strategic factors. It is not intended to be a final, definitive word on marine insurance as it should be applied to the Northern Sea Route (NSR), but should rather be regarded as an initial contribution to what will be a dynamic and continuously-evolving process over the coming years.

The background for the programme and the report has been ably and comprehensively chronicled in the pages of this Newsletter, so it is unnecessary to go into that aspect here. Suffice it to say that marine insurance is a vital component of any shipping operation, and it would not have been possible to progress very far in a programme such as INSROP without incorporating the insurance aspect.

The report aims to reach as wide an audience as possible: insurers contemplating widening their field of expertise and activity; Russian and Western shipowners seeking to expand their operations; cargo owners contemplating sending their goods along the Route; officials in government ministries with competence or interest in the matters discussed; legal experts whose task it is to draw up the legal and contractual framework within which operations will be carried out; researchers and academics; other Western interests who may simply be curious to find out about the Route, etc. Throughout much of the report, reference is made to events in Canada, the western country most experienced in Arctic shipping, and with an Arctic insurance market of its own.

The report begins with a description of the NSR region, including ice and ice patterns, seasons, bathometry, environmental factors and so on. The Russian legal and administrative framework is then examined, with a view to giving non-Russians an insight into the principal regulatory measures affecting navigation in the NSR. Three chapters on hull, cargo and Protection and Indemnity (P&I) follow, each offering perspectives on how these forms of insurance would have to be adapted and reworked so as to be usable in the NSR context. A concluding chapter contains conclusions and recommendations, intended as subject-matter for discussion by interested parties. Also included are a number of maps and tables, aimed at facilitating the reader's understanding of what for many is, literally, uncharted waters. A bibliography provides further references for anyone wishing to pursue particular points further.

Much remains to be done before marine insurance in what could be termed a usual form becomes a reality. Each new insurance situation, each client, each trade, presents its own characteristics. There are also the growing pains which every new business relationship carries with it, and which are worked out together by the parties involved. All in all, it makes for a very exciting, challenging dynamic. This report seeks to contribute to that dynamic.

The INSROP Secretariat at the Fridtjof Nansen Institute welcomes inquiries from parties interested in further information or in eventual collaboration in research or development of the International Northern Sea Route Programme.

Diana L. Torrens, 1994, Marine Insurance for the Northern Sea Route - Pilot Study, INSROP.©