The plan relies heavily on the maritime insurance industry, a web of insurers that provide coverage for ships and their cargo, liability for potential spills and reinsurance, a form of secondary insurance used to defray the risk of losses. Most of the major insurers are based within the Group of 7 nations, which have been coordinating sanctions against Russia for its war in Ukraine.
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Lars Lange, secretary general of the International Union of Marine Insurance, a consortium based in Germany, said he believed that even with a price cap, insurers would still be reluctant to cover Russian oil exports for fear of violating sanctions.
“This insurance industry is more than prepared to comply, but please set up the sanctions in a way that we understand and that we can comply,” Mr. Lange said. “And with this oil cap, there are challenges, at least from our side.”
Mr. Lange said the cap would not work if only a few countries agreed to it, because insurers from other countries would pick up the slack and cover the cargo at market prices.
Treasury Department officials working on the plan have been meeting with the insurance and financial services sectors to try to allay some of their concerns. They have suggested that the industry would not bear responsibility if sanctions are flouted, and that Russia and its oil customers would have to “attest” to the purchase price. Enforcing the cap, they said, would be similar to dealing with sanctions that have targeted oil exports from countries such as Iran and Venezuela.
Officials have also played down the notion that global participation is needed, arguing that countries such as India and China, which have been purchasing Russian oil at deep discounts, could benefit from a price cap without signing on to the agreement.