Many underwriters said they were likely to wait and see how the initial transits fared before committing to action
One of the biggest talking points for marine insurers at last week’s International Union of Marine Insurance Conference (IUMI) was the ongoing uncertainty around ship movements in the Black Sea.
The Black Sea Grain Corridor, an agreement brokered by the United Nations last year, ended in July when Russia said it would no longer guarantee the safety of vessels because – it alleged – parts of the agreement had been breached.
The original treaty between Russia and Ukraine was brokered by the United Nations and Turkey in July 2022 to allow grain and fertiliser shipments from certain Ukraine Black Sea ports – including Odesa, Chornomorsk and Pivdennyi – to be safely exported.
However, following the breakdown of the agreement, it seems Ukraine has recently created a unilaterally organised sea route to and from Odesa, with the first ships heading in and out of the port last week and numbers rising in recent days.
Insurers have been quick to step up to play their part, although it is likely that no shipowners would have agreed to put their vessels in the area without the requisite insurance coverage.
Yesterday (26 September 2023), broker Miller announced it had partnered with the Ukrainian authorities and technology company Clearwater Dynamics (CWD), to create a solution which will enable full war risks insurance coverage to be offered for vessels operating in the Black Sea.
Creating a corridor
Miller’s solution utilises CWD’s technology to enable advanced vessel tracking combined with 24/7 operations room monitoring and vessel reporting in the grain corridor, both while in transit and with continued support whilst in port and until vessels exit the high-risk area.
The broker said the solution provides another layer of security to insurers and underwriters with live oversight of all vessels in the area, as well as the ability to monitor their exposures in real time.
It will be underwritten by Lloyd’s and London market insurers, who will provide capacity for all of the risks.
Nick Summers, head of direct marine at Miller, said: “Insurance has a critical role to play in enabling the shipping of Ukrainian grain and we are proud to have been able to play a role in providing an industry-wide solution.”
Miller’s solution is a swift and admirable response from the insurance market, but underwriters in Edinburgh at the IUMI conference were a little less certain.
Many underwriters said they were likely to wait and see how the initial transits fared, believing that the Ukrainian government – rather than the marine insurance sector – may have indemnified the first vessels.
“The issue will be if the Russians attack a vessel,” said one underwriter. “If ships are fired on, the transits will end as the shipowners – and especially the crews – will not want to put their vessels and lives at risk.”
For its part, Ukraine said it was keeping Russia’s Black Sea fleet at bay and was confident the grain and other agricultural products, which are vital to the food security of many countries around the world, will find a way out of its ports.
Time will tell.