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London marine insurers to meet after ship attacks in Middle East

Published 15/05/2019, 16:05
© Reuters. FIL EPHOTO: A damaged Andrea Victory ship is seen off the Port of Fujairah

By Jonathan Saul

LONDON (Reuters) - London's marine insurance market will meet on Thursday to assess whether it needs to change the risk level for vessels in the Gulf after an attack on ships off the United Arab Emirates earlier this week, a senior official said on Wednesday.

Such a move could lead to an increase in insurance premiums.

On Tuesday, armed drones attacked two of Saudi Aramco's oil pumping stations and forced the state producer to briefly shut its East-West pipeline. The incident came two days after an attack on four oil tankers - two of them owned by Saudi Arabia - off Fujairah in the UAE.

"The Joint War Committee will meet tomorrow to assess the situation in the Gulf," said Neil Roberts, head of marine underwriting at Lloyd's Market Association (LMA), which represents the interests of all underwriting businesses in London's Lloyd's market.

"This is prudent as capital providers would expect underwriters to review their exposure in the light of recent developments," he told Reuters.

The UAE has not characterised the sabotage or blamed anyone for Sunday's attack, but U.S. national security agencies believe proxies sympathetic to or working for Iran may have been behind it, a U.S. official has said. Tehran has distanced itself from the incident, which no one has claimed.

Yemen's Houthi-run Masirah TV said the group had carried out the drone attacks on "vital" Saudi installations in response to "continued aggression and blockade" on Yemen.

"At the moment there are not many facts or verifiable information (about the attacks on Sunday)," Roberts said.

"There is no decision yet on whether to change the listed areas of enhanced risk. There are a number of options, which include no change."

He said any changes would take seven days to come into effect.

"Ships going into the Gulf already have to inform underwriters; the question is whether vessels within the Persian Gulf and operating there are additionally exposed."

The Joint War Committee, which comprises syndicate members from the LMA and representatives from the London insurance company market, normally meets every quarter to review areas it considers high risk for merchant vessels and prone to war, strikes, terrorism and related perils.

It has not updated the list of high risk areas since June 2018. Its guidance is watched closely and influences underwriters' considerations over insurance premiums.

Some oil and shipping companies said they would have to alter their routes or take precautions near Fujairah since Sunday's attacks.

Japanese shipping group Nippon Yusen has already decided to refrain from sending tankers to Fujairah for bunkering, maintenance or crew swaps except for emergencies, a company spokesman said.

© Reuters. FIL EPHOTO: A damaged Andrea Victory ship is seen off the Port of Fujairah

Others such as Denmark's Maersk Tankers told Reuters they were monitoring developments closely, with no impact on their operations in the area.

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