Insurance broker giants Marsh, Lloyd’s of London and Ukrainian state banks have agreed to launch a program to cut the cost of claims for damage to ships and crew transporting grain through the Black Sea corridor, Marsh said on Wednesday.
Kyiv launched a “humanitarian corridor” in August for ships bound for Africa and Asia to circumvent a de facto blockade in the Black Sea after Russia quit a Türkiye and United Nations-brokered deal that had guaranteed Kyiv’s seaborne exports during the war.
Lloyd’s of London insurers will underwrite the program, which provides $50 million of hull war risk cover and $50 million of protection and indemnity (P&I) insurance for every voyage.
Ships typically have P&I insurance covering third-party liability claims, including environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage.
The State Export-Import Bank of Ukraine (Ukreximbank) and state-owned lender Ukrgasbank will provide standby letters of credit, each confirmed by Germany’s DZ Bank, Marsh said in a statement.
The facility is backed by Ukraine’s Ministry of the Economy. Ukrainian Prime Minister Denys Shmyhal said late Tuesday that the arrangement involved 14 insurance companies.
The program has the support of the British government, Marcus Baker, Marsh’s global head of marine and cargo, told Reuters.
“For (commercial companies) to know that the U.K. government is standing behind this ... has really helped to give it the credibility that it needs,” he said.
War risk insurance premiums have risen to as much as 3% of the value of a vessel after a missile damaged a merchant ship in the Ukrainian port of Pivdennyi last week, industry sources said.
Baker said the program could reduce that cost to as little as “a third of the existing pricing.”
Ukraine’s financial backing for the scheme meant insurers would be able to charge less than current extremely high rates for traveling through the corridor, he added. “They (the market) will be able to have reimbursement of funds into their coffers if they pay a claim,” he said, declining to provide further details.
The program will cover shipments through Ukraine’s Danube ports and Odesa, Chernomorsk and Pivdennyi. It is led by Lloyd’s syndicate Ascot, Baker said.
Marsh also runs a separate facility to insure the actual grain cargo in the region. Ascot is also the lead insurer on that program.
