Insurers are ready to expand on an initial $50m cargo insurance package covering Ukrainian grain shipments, according to broker Marsh’s Marcus Baker.
The global head of marine and cargo insurance said the policy — announced by Marsh and underwriter Ascot last week — marks the initial response by the commercial insurance market to covering Ukraine grain shipments.
It is currently limited to cargo insurance and does not yet include hull or other shipowner liabilities.
Baker said that underwriters are cautious but “have shown an appetite for this”.
“This is only a small part of what is eventually going to be required,” he said. “It is not a hull product at the moment, but underwriters will be considering their position.”
The pricing for the cargo policy has yet to be determined, but a lot will depend on how the trade develops and the eventual security arrangements.
“At the moment it is a case of ‘let’s see how things go’, then the market will get a view of the numbers. If all goes well, and we hope that it will, then I’m sure there will be an appropriate number,” he said.
Baker believes that underwriters will not be seeking to take commercial advantage of the situation in Ukraine but will step forward to support the exports.
“There is a keenness not to take advantage of a humanitarian situation. I think the market will see this as — if I use the word ‘obligation’, it is probably a bit too strong — but something for us as a society to help out with,” he said.
There are still many uncertainties, including the availability of crew, whether ships can be loaded and the presence of mines and security of the shipping routes.
But he said the package with Ascot will alert shipowners to the availability of insurance and encourage participation in the trade: “As people see you can actually get insurance cover, then they will start to think about it.”
The package is put together mainly by Lloyd’s of London underwriters. However, there is likely to be strong participation in the insurance coverage of Ukrainian exports from war risk mutuals.
One mutual war risk underwriter told TradeWinds: “We don’t need any special facility, the market will be there for this trade.”
Chris McGill, head of cargo at Ascot, said: “This bespoke, mission-focused facility allows the insurance market to play its part in enabling the vital transportation of grain and food product out of Ukraine to the wider world.”