Insurance and compliance costs for transport companies are set to stay high after Western countries imposed trade restrictions on Russia with the prospect of broader sanctions putting more pressure on global trade, a survey showed, according to Reuters.
Russia has faced multiple sanctions since last year from Western countries including the United States, the European Union and the UK. These measures have added to existing sanctions on countries such as Iran and Venezuela, which have increased commercial burdens for companies.
In a first study by law firm DWF, which canvassed leading transport companies in the road, rail, sea and air sectors, 64% expected increased insurance costs, and that number also saw international sanctions becoming more common in future. The survey, which polled executives from companies with revenues ranging from $1 billion to $100 billion - also found that 56% believed that a world with more sanctions would be riskier for their businesses.
"Russia sanctions are adding to the considerable burden of compliance costs for businesses," Jonathan Moss, DWF's global head of transport sector, told Reuters. "The risk of non-compliance is serious as custodial sentences and large fines are a constant threat and enforcement actions are likely to be instigated more regularly in the coming months."
Moss said there had been notable rises in insurance premiums in aviation, marine, energy, political risk and cyber security. "A rise in claims with jets stranded in Russia and vessels stuck in Black Sea ports, together with expected future losses, a collapse in investment returns, reduced capacity and recessionary pressures have contributed to unprecedented high premiums in some lines of business," he said. "A perfect storm is brewing. The inability for insureds to access their asset with insurers unable to investigate claims, send in loss adjusters and transfer payment to experts because of sanctions rules are also contributing to upward pressure on rates."
The survey - which was conducted between October and November last year - canvassed 50 senior executives with transport companies including the container and dry bulk shipping sectors, air and road cargo and freight forwarding.