Insurers are considering coverage for Black Sea vessels after Russia abandoned deal – sources Ship’s crew

Reuters

By Jonathan Saul

LONDON, July 17 (Reuters) – Insurers are considering whether to freeze insurance coverage on all ships willing to sail to Ukraine after Russia on Monday withdrew from a United Nations-backed deal restricting the export of grain via a wartime-safe Black Sea corridor, industry sources said.

The deal, negotiated by Turkey last July, aimed to alleviate a global food crisis by allowing the safe export of Ukrainian grain blocked by Russia’s invasion of its neighbor in February 2022.

“Due to the failure of the Black Sea Corridor agreement, most shipowners will now refrain from calling at Ukrainian ports,” said Christian Vinther Christensen, Chief Operating Officer of the Danish shipping group NORDEN.

The last ship left Ukraine under the deal on Sunday.

Why expiry of the Black Sea Grains Agreement matters

According to industry sources, insurance is vital to ensure deliveries through the corridor Russia’s decision It was checked whether the insurance cover could continue in any form.

“Some insurers will try to take advantage of this by raising tariffs sharply. Others will stop offering protection. The (key) question is whether Russia mines the area, which would result in no insurance coverage being offered,” said an insurance industry source.

The insurance market Lloyd’s of London has already put the Black Sea region on its high-risk list.

“Annual coverage will remain in place but travel to the areas listed will be assessed individually as required,” said Neil Roberts, head of marine and aviation at Lloyd’s Market Association (LMA), which represents the interests of all insurance companies at Lloyd’s.

Additional war risk insurance premiums levied upon entry into the Black Sea region must be renewed every seven days. They already cost thousands of dollars and are expected to rise, while shipowners may be reluctant to allow their ships into a war zone without Russia’s approval.

“I don’t think there are many inquiries at the moment as without an initiative it would be difficult to get an owner to operate on earlier charter terms,” ​​said another industry source.

“Other than the provision for additional insurance costs, risk benefit rates would likely be required.”

Moscow’s withdrawal from the agreement means that “guarantees for the safety of shipping provided by the Russian side will be revoked,” Russia told the UN shipping organization International Maritime Organization on Monday in a letter seen by Reuters.

The LMA’s Roberts said the letter “takes on a tone that differs from previous statements.”

“From an underwriting perspective, the corridor travel offers would have expired, so a renegotiation of the terms is to be expected,” he said.

“With the withdrawal of the Russian security guarantees, the risk profile would have to be reassessed. It may also be that some charterers are reconsidering their options.”

(Reporting by Jonathan Saul; Editing by Grant McCool)

(c) Copyright Thomson Reuters 2023.

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