War Risk underwriters have started to offer tentative pricing indications to dry bulk operators interested in taking part in humanitarian grain exports from Ukraine.
Initial quotes of about 2% of hull value, or lower, have been quoted by the London market to operators that have expressed an interest in the trade.
“Owners have approached us asking what it would cost for cover,” one underwriter said. “We’ve said around 2% or less, but come back to us when you have more details.”
According to broking sources, the major London market players have mostly indicated they will be prepared to offer terms, including the likes of Beazley, Canopius, Ascot, AXA XL and Hiscox.
Brokers said the more ships that safely transit the region, the more likely it is that rates will drop further.
The ships involved in the trade are bulk carriers up to panamax size and typical valuations vary between $20m and $50m.
At the current rates being quoted, the maximum premium payable for a panamax newbuilding valued at $50m through the Black Sea additional premium region would be $1m.
But it is unlikely such high-value vessels would operate in the trade and, in most cases, premium would be considerably lower.
A 10-year-old panamax — more typical of the ships involved in the trade — valued at $26.5m would pay $530,000.
War risk underwriters have been encouraged by the safe passage of ships in the early days of the trade. The recent announcement of standard operating procedures by the Joint Coordination Centre in Istanbul has also helped underwriters assess the risk more accurately.
Food insecurity
The London insurance market has said it would be there to back the trade. Patrick Tiernan, chief of markets at Lloyd’s of London, said: “The recovery of these grain supplies is vital to addressing global food insecurity and market uncertainty at this difficult time.”
Representatives of the mutual war risk underwriters have also told TradeWinds that they are ready to provide cover for the trade.
Marcus Baker, global head of marine insurance at broker Marsh, said insurers would not seek to take commercial advantage of the trade.
Marsh and Ascot Underwriting recently launched a $50m cargo and war risks policy for Ukraine grain exports.
