Insurers Increase Coverage of Grain Shipments to Ukraine After Action to Reopen Black Sea Ports

A number of insurers are interested in covering grain shipments from Ukraine after a deal to reopen Black Sea ports, although the first shipments are expected to take weeks, industry sources said on Friday.

Russia and Ukraine signed a landmark agreement on Friday to reopen ports for grain exports, raising hopes that a global food crisis exacerbated by Russia’s aggression could be eased. The agreement was based on two months of negotiations facilitated by the United Nations and Turkey, a NATO member that has good relations with Russia and Ukraine and manages the problems that lead to the Black Sea.

Shipping protection and insurance will be an important part of the upcoming project.

“There are a number of underwriters who have expressed an interest in underwriting this risk and one or two brokers. It could be a deal that has been made,” Neil Roberts, head of shipping and aviation at Lloyd’s Market Association, told Reuters.

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“A number of things need to be resolved and the underwriters need to evaluate each cruise individually,” said Roberts, whose organization represents the interests of all businesses doing business in the Lloyd’s of London insurance market.

Ukraine’s ports have been closed since Russia’s invasion in February, which Moscow calls a “special military operation,” and not enough is known about the state of the ports and dangers such as floating mines and damaged ships in port areas.

“Ship owners will need some form of financial assurance. So at least the first few trips should prove that the routes are safe,” said a senior shipping company official.

The first problem is that there are more than 80 ships docked in Ukraine, most of them carrying cargo including grain, which have to leave before new ships can enter, the sources said.

The LMA’s Roberts said the details of the draft include “what ships can be repatriated from nearby (Ukrainian ports).”

“We expect some kind of test to stimulate sales. We can’t expect the ships to start going out for a couple of weeks,” Roberts said.

“Then there is the question of leasing and who is arranging what. It will take time for these contracts to be established.”

The LMA has placed Ukrainian waters at their most vulnerable location and any sea voyages need to be approved by the underwriters, who are awaiting details on how the agreement will work.

“The interest is there for the service, but the underwriters cannot give any idea about the type of cover or the prices until they know more,” an insurance source familiar with the matter said. “It’s how it goes from the diplomatic table to the plan that really makes a difference.”

The closure of Ukrainian ports and Russian Black Sea shipping, locking millions of tons of grain in silos and diverting many ships, has exacerbated the international crisis, and Western sanctions have led to an increase in food and energy prices around the world. the world.

James O’Brien, head of the US State Department’s Sanctions Coordination office, said their goal was “to see the agreement fully implemented.”

“Based on our discussions with the insurers, if there is a full implementation of the plan, we think the insurance and the fleet will be there,” O’Brien told reporters on Friday.

Guy Platten, secretary general of the International Chamber of Shipping, a global trade group, said they are ready to work with all groups.

“Ensuring the safety of the workers is essential if we want the deal to move forward as quickly as possible,” Platten said. “Questions remain about how ships operate in heavily mined waters and how we can best manage ships in the area to meet their expected timelines.”

(Reporting by Jonathan Saul; writing by Diane Craft and Leslie Adler)

Photo: Ships docked at the Black Sea port of Constanta, Romania, Tuesday, June 21, 2022. Although Romania has clearly agreed to become a hub for agricultural products from Ukraine, economists and the port. The country’s workers warn that it was a goal easier to set than to achieve. (AP Photo/Vadim Ghirda)


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