Insurers will be willing to cover ships that sail via a proposed corridor to transport grains from Ukraine if arrangements are made for international navy escorts and a strategy to deal with sea mines and brokers.
Ukraine, Turkey, Russia, and the UN may sign a deal later this week, aimed at resuming the shipping of grains across the Black Sea from Ukraine.
Ports in Ukraine have been closed since Russia invaded it in February, which Moscow continues to refer to as a “special military operation,” with many marine insurers based in the Lloyd’s of London as well as the broader commercial insurance market of London waiting for further assurances given the losses associated with each vessel.
Insurance for vessels would be possible if a sensible solution could be offered, reported Rory Colacicchi, a partner at McGill and Partners, an insurance broker.
An acceptable and appropriate escort would be provided by joint Russian and Ukrainian ships, the UN, or a neutral power like Turkey, the insurance sources added.
An aide to mine sweeping may be the use of satellite technology to detect locations of the mines, reported a marine war insurer.
The insurer further added that countries like the US, France, and Britain might have such advanced technology.
The initial issue is that more than 80 vessels are stuck in Ukraine. Sources mentioned that several of those are loaded with cargoes, including grains, which need to get out before new vessels can go in.
A second UK-based broker said that his company had collaborated to get an “insurance framework” for a vessel keen to go into Ukraine to get the grains out once a corridor is activated.
The client is currently on standby to visit from a humanitarian point of view.
Additional premiums levied to reach the broader Black Sea areas have lowered, indicating greater confidence to offer insurance since February 2022, per industry sources.
The additional premiums paid to go into the waters of the Black Sea have dropped to 2% of the ship’s value from 5% after the invasion, reports Marcus Baker, the global head of marine at broker Marsh.
References: Nasdaq, US News