(Reuters) — The cost of chartering ships to transport goods from the Black Sea has risen by more than a fifth since the start of the year, reflecting higher war risk insurance prices, industry sources said.
The Black Sea is crucial for the transport of grain, oil and oil products. Its waters are shared by Bulgaria, Georgia, Romania and Turkey, as well as Russia and Ukraine.
Since January 1, when policies are renewed, reinsurers that provide financial protection for insurance companies have added ship and aircraft exclusions for Belarus, Russia and Ukraine.
Six insurance sources, who spoke on condition of anonymity, said an exodus of reinsurers from the market had raised concerns about the risk of ship seizures from Russia and liabilities related to the war in Ukraine, including floating mines or ships stuck in ports for long periods.
Since the exemptions were introduced this year, insurers providing cover will not have reinsurance cover for large claims.
The sources said no ships had lost their insurance, but they expected higher rates that would vary depending on specific circumstances and that war risk premiums had so far risen by more than 20%.
That could add to inflationary pressures, which last year hit multi-decade highs after the Ukraine war pushed some commodity prices to record highs.
“The effect of (the reinsurers̵7; exit) is reducing (underwriting) capacity in the war risk market and will mean people will pay more this year,” said a marine insurance source involved.
Ships usually carry protection and indemnity insurance, which covers third-party claims including environmental damage and injury. Separate hull and machinery policies cover vessels against physical damage. In addition, ships usually have annual war insurance.