Contributing author: Dimitris Ampatzidis, Senior Risk & Compliance Analyst at Kpler
Higher stakes for underwriters and P&I clubs
For insurers, the consequences of underwriting a sanctioned vessel or cargo are stark. Regulatory bodies demand strict adherence to sanctions laws, and any suggestion that an insurer has extended cover without meticulous checks can result in heavy fines, licence revocations and significant reputational damage. Moreover, the forced mid-year withdrawal of coverage upon detecting a breach can disrupt forecast premium revenue, further straining financial projections and market positioning.
Protection & Indemnity (P&I) clubs, operating on a mutual basis, are equally exposed: a single large claim involving a sanctioned vessel could tarnish the entire club’s reputation and drive up costs for all members. The claims process itself poses additional challenges. Should a vessel found to be in breach of sanctions suffer a casualty, insurers may be thrust into a complex legal and regulatory battle to defend the validity of their cover. Even if a claim is ultimately repudiated on the grounds of sanctions violations, the associated legal fees and administrative burdens can be immense.
Reinsurers are increasingly demanding robust evidence that front-line insurers have exercised due diligence often requiring continuous monitoring of vessels rather than a one-off check at the inception of the policy period. In response, many insurers and P&I clubs are recalibrating their risk appetites. Some are narrowing the regions or cargo types they cover, while others are investing heavily in compliance infrastructure and third-party data tools. A growing trend is the integration of internal processes with external intelligence platforms capable of tracking vessels in near real-time, generating alerts for unusual activity and mapping historical associations with restricted parties.
Between October 2023 and September 2025, the number of unique vessels associated with management risks followed a sharp but short-lived surge. For most of 2023 and early 2024, new vessels flagged for issues such as missing P&I cover, improper classification, or unknown ISM managers remained relatively stable at 20–30 per month. From late summer 2024, however, the trend accelerated dramatically, peaking at over 120 vessels in December 2024–January 2025, coinciding with intensified enforcement measures by regulators and sanctions lists expanding to cover hundreds of ships. As classification societies and P&I clubs severed ties with high-risk fleets, a wave of vessels entered the “at risk” category almost simultaneously. By mid-2025, the pace of new additions slowed markedly, falling back to fewer than 30 vessels per month, suggesting that while the initial shock of regulatory tightening exposed a large backlog, the pool of new cases has since diminished, leaving insurers to contend with the long tail of persistently non-compliant operators.
*To be concluded next week
