Insurers review coverage of Black Sea vessels after Russia withdraws from deal

Insurers are looking into the possibility of freezing coverage for ships wishing to sail to Ukraine after Russia on Monday abandoned a UN-backed deal that allows the export of grain through a safe corridor in the Black Sea, according to industry sources.

The agreement, negotiated by Türkiye last July, it sought to alleviate the global food crisis by allowing the safe export of Ukrainian grain blocked by the Russian invasion of its neighbor in February 2022.

“Due to the failure of the agreement on the Black Sea corridor, most shipowners will now refrain from calling at Ukrainian ports“, said Christian Vinther ChristensenCOO of the Danish shipping group NORDEN.

The last ship to leave Ukraine under the agreement did so on Sunday.

Insurance has been vital in securing shipments through the corridor and industry sources said Russia’s decision was being assessed as to whether coverage could be continued in some form.

“Some insurers will try to take advantage with a sharp increase in rates. Others will stop offering coverage. The (key) question is whether Russia mines the area, which would stop offering any form of cover”, said a source in the insurance sector.

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

“Annual coverage remains in effect, but travel to listed areas will be assessed on a case-by-case basis“, said Neil Robertsresponsible for maritime and aviation insurance of the Lloyd’s Market Association (LMA)which represents the interests of all insurance companies Lloyd’s.

The additional premiums for war risk insurance, which are charged when entering the Black Sea area, have to be renewed every seven days and already cost thousands of dollars and are expected to rise, while shipowners may be reluctant to allow their ships enter a war zone without Russia’s agreement.

Source: Reuters