Ukraine nears deal with global insurers to cover grain ships, claims Ukraine minister

Ukrainian minister Oleksandr Ryban has claimed that Ukraine was finalizing a scheme under which grain ships travelling to and from Ukrainian Black Sea ports would be covered by “global insurers”, reports the Financial Times.

Gryban, a special envoy for the country’s economy ministry, said that a deal was being “actively discussed” with international insurance groups, including the Lloyd’s market.

He said that the deal could be in place before the end of September. “It depends on how the structure goes and what level of risk-sharing is going to be the (Ukrainian) government and private insurance companies”.

Ukraine is reported to be receiving advice from Marsh McLennan (which includes consultancy group Oliver Wyman as well as broker Marsh) on a pro bono basis.

The FT reported that the details of the scheme were still to be finalized, but that people involved in the discussions had said that the arrangement would entail a public-private partnership insuring vessels against damage if they were involved in import-export to and from Ukrainian Black Sea ports. A local Ukraine state-owned bank could act as a co-insurer, possibly providing a letter of credit as collateral.

Gryban told the FT that the public portion of the risk would probably be backed by the Ukrainian state road fund, which is funded by a tax on fuel sales.

Meanwhile on Monday Denys Marchuk, deputy head of the Agrarian Council, Ukraine’s largest agribusiness organisation, told national television that, although only the one commercial vessel had travelled the Ukrainian “humanitarian corridor” so far, “it has shown readiness to move by alternative routes”.

He said that potentially seven or eight ships in Ukrainian Black Sea ports could be used to move grain to Istanbul and beyond. “Perhaps in the future these alternative routes will become a corridor for the movement of ships that are travelling with cargoes of grain and oilseeds”, he said.

A Lloyd’s market representative said that agreements to enable the continued exports of grain and fertilizer from Ukraine were crucial in addressing risks to global food security, adding that the market was continuing to work to facilitate grain shipments.