Frederic Denefle, president of the International Union of Marine Insurance (IUMI), said marine war risk underwriters are finding solutions to providing cover for ships trading to Russia and Ukraine after reinsurers pulled their support.

Reinsurers introduced a Russian and Ukraine exclusion clauses when they renewed treaty cover with insurers at the annual 1 January policy renewal.

The clauses removed a critical layer of security for underwriters insuring ships carrying grain from Ukraine, or non-sanctioned oil and gas from Russia.

Denefle said war risk underwriters are now seeking limit their own exposure while providing shipowners with cover.

“The challenge insurance companies face is how they would find their way around risks without the support of reinsurers,” Denefle said at an IUMI gathering in London.

“We have had to deal with it, take some risk out, and balance it out,” he said.

Denefle is closer to the issue than most in his role as chief executive of French specialist war risk underwriter Garex.

“We need to go back to a better spread of risk and increasingly make sure, with the broker involved, that we can also find people to share the risks, or potentially we take the risk on our own,” he said.

Controlling the accumulation of risk has been another key element. Digital technology is being used to help insurers make sure that the underwriter does not have too many assureds in a high-risk area at the same time.

Denefle said the withdrawal of backing by reinsurers this January had caught the market by surprise. “We did not expect such a pronounced reaction from them, we thought it would be more progressive,” he said.

Denefle said geopolitics is increasingly influencing the work of marine insurers as a result of sanctions from the US, Europe and Iran.

“Iran will halt shipping trade against any nation that has raised sanctions and embargoes against their interests, which has enormous implications for the Persian Gulf,” he said.

He also cited the tension between China and Taiwan as a cause for concern.

Other issues that are affecting marine insurers include the economic downturn and inflation, safety — including ro-ro and container ship fires — and Environmental Social and Governance matters.

He said IUMI had a role to play in helping the marine insurance industry through the current situation.

“IUMI has a responsibility to navigate and support the marine insurance industry. A downturn in trade, geopolitical tensions, inflation, ESG factors — as well as onboard safety — are all creating complexity,” he said.

“We remain fully committed to assisting our members and providing comprehensive guidelines to the larger marine insurance market.”

IUMI members will gather to discuss the industry’s issues at its annual conference which will be held in Edinburgh in September.