North Korean insurance blues

Some readers may recall how the Diet of Japan passed legislation some years ago which was fairly clearly targeted at the North Koreans. The Japanese legislator required that all ships calling at Japanese ports had to have valid insurance. It was known that the rather ramshackle fleet from North Korea did not carry insurance and it was thought this measure would effectively keep the ships from calling. And with this any possible involvement of said ships in undesirable smuggling and sanctions busting activities would ensue at least in the waters of Japan.

Unfortunately, soon after this measure was passed, North Korean ships turned up with certificates of insurance issued by the South of England P&I Association, a somewhat obscure start up, not affiliated with the P&I mainstream, with many unknown or unproven qualities.

If the world community decides to impose sanctions on North Korea, shipping will figure high on the list. Cargoes of “luxury goods” destined for the nomenklatura may be interdicted in some way and the acceptability of the North Korean-flagged vessels, never very high at the best of times, will reach a new nadir.

The measures are unlikely to paralyse all shipping in North Korea as long as the South Koreans continue their modest engagement with their difficult northern neighbours.In many ways,the future of the North Korean economy is already rather reliant on oil and food supplied by China under quite generous terms. Should the flow of these commodities decrease to below the current levels, further serious economic and social disarray is likely.

The ranks of companies who today provide some sort of international cover to the ports and ships of the country, not exactly a cash rich market, are likely to thin over the next few months to the sturdy few who more or less specialise in providing cover for difficult-to-insure regimes.