Page 10 - FSUOGM Week 43 2022

FSUOGM PIPELINES & TRANSPORT FSUOGM

Nord Stream insurers

caught in a knot

GERMANY THE insurers and reinsurers of the Nord Stream According to Reuters, the damage would
1 and 2 pipelines have been left in limbo, follow- not necessarily affect the renewal of a property
The question of who ing suspected sabotage that resulted in major policy but insurers might request a greater pre-
caused the leaks is leaks at the pipelines in late September. mium. For the underwriters of Nord Stream 1,
creating sabotages. According to Reuters, these insurers and which cost $7.6bn to build, the stakes are high.
reinsurers have been left struggling to know Reuters noted it was unable to identify all the
how to respond to hundreds of millions of dol- underwriters, but sources said Switzerland’s
lars in potential claims. Munich Re and syndi- Zurich had exposure to Nord Stream 1.
cates within the Lloyd’s of London market are “Even if you are taking a small size [of cover],
among the biggest underwriters for Nord Stream it is a big risk,” one source said. “The issue is
1, sources told the news agency. It is unclear going to be what happens if you can’t prove it is a
whether they will renew, and if renewal does not state sponsor [responsible for the damage], you
happen, it will be increasingly unlikely that the end up with a massive claim for damage.”
pipeline will ever restart. Nord Stream 1’s majority shareholder is Rus-
Nord Stream 1 halted flow a month before the sia’s state-owned Gazprom with a 51% stake. The
leaks occurred, after progressively reducing its Netherlands’ Gasunie, France’s Engie and Ger-
supplies over the summer. Gazprom claimed the man companies Wintershall Dea and E.ON own
cause was technical difficulties related to West- the remaining shares. Sources told Reuters that
ern sanctions, but Germany and some other the renewal of cover by Lloyd’s syndicates would
major recipients of the pipeline’s gas claimed be problematic because of the risk that sanctions
political reasons. Nord Stream 2 was never against Gazprom are intensified.
brought into operation. Ultimately, insurers will have to show that
No claim has yet been made regarding dam- the policy does not extend to damage caused
age and disruption to Nord Stream 1, but under- by the blasts, so that they can avoid paying out
writers may dispute anything that is submitted on claims. Although property policies usually
on the grounds that the cause was an act of war exclude malicious damage, policyholders often
or self-sabotage – neither of which is usually pay for extra cover for this, according to Reuters.
covered by insurance. Danish police concluded Russian President Vladimir Putin has
earlier this month that damage to the pipelines accused Washington and its allies of destroy-
was the result of powerful blasts. It is widely con- ing the pipelines, although the US and Euro-
sidered by European governments and Russia’s pean governments have not explicitly blamed
that the cause was sabotage. Russia.™

P10 www. NEWSBASE .com Week 43 28•October•2022