London Insurance Sector Readies $50M Ukraine Grain Cargo Cover
London Insurance Sector Readies $50M Ukraine Grain Cargo Cover
According to industry sources informed on Wednesday, the London insurance sector is getting ready to cover Ukrainian grain and fertilizer exports through a secure corridor, trips that may require up to $50 million in insurance coverage per cargo.
The Black Sea region has been added to the list of high-risk areas for London’s maritime insurance market, driving up insurance rates.
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Every ship will require distinct layers of cover for the hull and machinery, as well as for the cargo, for each voyage. Underwriters additionally charge a fee for access to certain areas.
Hiscox, a Lloyd’s Insurer, will offer insurance for grain shipments from Ukraine
London Insurance Sector Readies $50M Ukraine Grain Cargo Cover
Lloyd’s insurer Ascot and broker Marsh have launched a facility for grain traders to provide up to $50 million in cargo cover for every voyage, Marsh’s global head of marine and cargo Marcus Baker said.
“We have had some enquiries in the last couple of days and we fully expect that to gain traction,” he told Reuters, adding that $50 million was more than enough for most grain shipments.
While there were issues to be resolved related to the corridor and the ports, he said: “The fact we have this in place means when it does happen, we can get moving.”
Baker declined to comment on pricing but said the facility would include a “no claims bonus” – a refund for a voyage without mishap.
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He also said other insurers could join Ascot in providing the cover.
The first grain ship to leave a Ukrainian port since Russia invaded on Feb. 24, following a deal brokered by Ankara and the United Nations, was set to pass through the Bosphorus after inspection ended on Wednesday.
London Insurance Sector Readies $50M Ukraine Grain Cargo Cover
It is unknown what insurance the first prominent shipment carried, but industry leaders emphasized that insurance would be necessary on every journey.
According to a Turkish official, following the first successful flight, the quantity of deliveries from Ukraine may increase.
Together with a U.N. team, military representatives from Turkey, Russia, and Ukraine have established a Joint Coordination Centre (JCC) in Istanbul to facilitate exports from the three Black Sea Ukrainian ports of Odesa, Chornomorsk, and Yuzhny.
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For companies wishing to write the transits, more risk information was required, according to Neil Roberts, head of marine and aviation at the Lloyd’s Market Association, which represents all underwriting activity in the Lloyd’s of London insurance market.
London Insurance Sector Readies $50M Ukraine Grain Cargo Cover
“The market awaits approval of inbound voyages by JCC Istanbul,” Roberts said.
Other insurance solutions are also being worked on.
Hiscox is committed to a planned insurance consortium providing hull and cargo cover for ships traveling through a safe passage from Ukraine, its chief executive said on Wednesday.
Initial costs for the additional premium to cover ships for any attack were being worked out at around 3% of the value of a ship for a 7-day period, one insurance source said.
That compares with up to 1.5% for the wider Black Sea waters, which would still be hundreds of thousands of dollars in costs for a seven-day voyage.
(Reporting by Jonathan Saul and Carolyn Cohn; editing by Barbara Lewis)
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