Marine insurers seek more assurances on potential Ukraine grain corridor

Marine insurers will only be willing to cover ships carrying Ukrainian grain through a proposed corridor to get Ukrainian grain out of ports such as Odesa and through the Black Sea to the Mediterranean if arrangements are made for international navy escorts and a clear strategy to deal with sea mines, reports Reuters, citing underwriters and brokers.

Russia, Ukraine, Turkey and the United Nations were expected to sign a deal before the end of the week that would aim to resume the use of the Black Sea for the export of grain that is stacking up in silos in Ukraine.

Rory Colacicchi, a partner at insurance broker McGill and Partners, told Reuters that cover for the ships would be possible “if a sensible solution were offered”.

“There would have to be escorts, mine sweepers, so an underwriter could say ‘that’s given us the satisfaction that it’s not just a gamble’. At the moment, that’s just a gamble, you wouldn’t be able to go.”

An acceptable escort could be provided by joint Ukrainian and Russian ships, or by the United Nations or a neutral power such as Turkey, insurance sources said. However this raises further problems. One would be finding neutral powers willing to provide the escort; another would be, if navy vessels other than those from Russia, Ukraine or Turkey were proposed, the 1936 Montreux Convention regarding the Regime of the Straits would come into play.

There are currently more than 80 ships stuck in Ukraine ports – many of them with cargoes onboard (including grain) and these would need to get out before new ships can go in.

Additional premiums charged to go into the broader Black Sea area have dropped, reflecting more confidence to provide insurance since February, industry sources told Reuters. The additional premiums paid to go into Black Sea waters had dropped to 2% of the value of the ship from 5% shortly after the invasion, said Marcus Baker, global head of marine at broker Marsh.