Northern Sea Route: Insurance and regulation

Navigation

Published: 6 January 2015

Interest in traversing the Northern Sea Route continues to increase, with seasonal changes making the route a more viable option for longer periods of the year. Part of the preparation for such a voyage is to understand the extent and limits of standard insurance terms and cover. That will also be relevant with respect to the necessary regulatory compliance issues that comes from taking this "new" route.

The development

Due to seasonal changes the route along the north of Russia leading, all the way from Europe to the Bering Straits, is becoming increasingly "ice free" (although that does not mean there is a total absence of ice). As such it is becoming of interest as an alternative route between east & west, with the possible benefits of a shorter voyage, consuming less fuel, and avoiding extra costs from canal fees or piracy related issues.

On the other hand it is a route that brings with it its own unique challenges and issues, one of which being the traditional exclusion from hull and machinery cover for voyages that go along the Northern Sea Route. Specific permission would need to be sought from underwriters before there would be cover.

In the attached article, Anders W. Faerden, Trond Eilertsen, and Herman Steen of Wikborg Rein explore some of the issues that may arise from navigating the Northern Sea Route under the Nordic Marine Insurance Plan terms, as well as related regulatory issues.

Loss prevention advice

While a passage along the Northern Sea Route may not be as adventurous an undertaking as when it was first attempted by early explorers, it does remain a voyage which requires careful preparation in order to complete it safely.

Not only must ships and crews be ready to meet the challenges of the voyage, but part of the advance planning requires a review of insurance arrangements as well as regulatory compliance requirements, so that the voyage is both physically and legally safe.

As always, it is the effort and investment made in advance that yields the most dividends later.

The Association is grateful to Wikborg Rein for permission to republish their article.