The war risk insurance market is ready to hike rates in response to a possible escalation of attacks on commercial shipping in the Black Sea.
As the London market opened for business following a weekend in which there was a Ukraine drone attack on the Russian-flag tanker Sig — and an earlier attack on the warship Olenegorsky Gornyak — rates were still around the 1% of insured values.
But, underwriters said the situation in the Black Sea was volatile and “could change at any moment”.
In response, war risk quotes are generally now valid for only 24 hours, compared to the previous 48 hours.
“Many underwriters are taking the view that even after the recent attacks the level of risk is already accounted for in the current pricing levels,” one broker said.
However, while brokers were earlier able to negotiate some no-claims discount on rating on behalf of shipowner clients, underwriters are now said to be seeking a full 1%.
The Ukraine maritime agency has warned commercial shipping that all Russian ports should now be considered a “war risk area”.
Kyiv has said six Russian Black Sea ports are at war risk including, Anapa, Novorossiysk, Gelendzhik, Tuapse, Sochi and Taman.
But one view is that the risk profile for commercial shipping in the Black Sea has not changed significantly.
Ukraine will only target Russian-flag ships that Western insurance firms can no longer cover, as attacking a non-Russian flag ship would also run the risk of weakening support from its backers in the Nato alliance.
Underwriters also note that there has also been a decrease in top shipping firms trading in the Black Sea in response to the increased risk and sanctions.
The main risk at the moment appears to be over a commercial ship being caught in the crossfire of exchanges between Russia and Ukraine as ports become the focus of attacks.
The Ukrainian ports of Odesa, Izmail and Reni have come under attack. The Russian warship Olenegorsky Gornyak was hit just outside the port of Novorossiysk and the tanker Sig outside the Kerch Strait.
