An insurance scheme has been finalised to cover Ukrainian grain shipments, with the deal getting the support of the Lloyd’s of London market.
Lloyd’s of London insurer Ascot and broker Marsh are heading a dedicated facility that includes 10 other insurers. Up to $50m of cover will be provided for each ship carrying Ukrainian grain.
Patrick Tiernan, chief of markets at Lloyd’s, said the facility will “add essential protections to the deal brokered by the United Nations last week and represents the latest support from Lloyd’s and the insurance industry to help the international community respond to the conflict”.
Maritime underwriters have been in talks in Istanbul this week — along with with the commercial shipping industry and the new Joint Coordination Centre — to finalise security measures for the shipments.
The centre was established to manage the trade after last week’s international agreement to allow the resumption of Ukrainian grain exports.
The right security measures are critical for underwriters to insure ships using the trade.
Emergency relief coordinator Martin Griffiths, the UN under-secretary general for humanitarian affairs, told a press conference on Thursday he had assurances that the commercial insurance market would back the trade. He hinted that underwriters would price the cover at a level that would be workable.
“My information from my colleagues in Istanbul is that there is an appetite for this at a reasonable price. That is what came out of a meeting yesterday in Istanbul with the commercial sectors, but we will see,” he said.
At the meeting, underwriters were able put their views forward on the security measures to cover the trade.
“The meeting that was held yesterday in Istanbul with our team and the shipping sector was very detailed on what was needed,” Griffiths said.
“If ships move without the right procedures to approve those movements being in place, then they are at risk.
“And the commercial sector would be right not to wish to move, so we need to get those procedures finalised. It has to do with what are the exact coordinates of the channels and how will we fulfil our obligations.”
It has emerged that the UN has been working closely with the insurance market throughout the negotiations with Turkey, Russia and Ukraine on re-establishing grain exports to ensure that it is commercially viable.
Several vessels, including Turkey-flag ships, are loaded with grain and ready to sail.
Lloyd’s chairman Bruce Carnegie-Brown earlier told news agency Reuters that Lloyd’s marine insurance market wants to back the trade.
“Following the agreement between Russia and Ukraine on the export of grain, we’re working quite hard with market participants to make sure we can develop policies that can support it,” he said.
“We are expecting to see the announcement from brokers and underwriters of some products that will support this in the next few days.”
There also appear to be moves to get state involvement in the trade. Kyiv officials have been quoted saying they would like to have the World Bank and the European Bank for Reconstruction & Development involved in an insurance scheme to cover the trades.