(Reuters) – Insurance companies will only be willing to cover ships sailing through a proposed corridor to get Ukrainian grain out if there are arrangements for international naval escorts and a clear strategy for dealing with sea mines, say insurers and brokers.
Russia, Ukraine, Turkey and the UN are expected to sign an agreement later this week aimed at resuming the transport of grain from Ukraine across the Black Sea.
Ukraine’s ports have been closed since Russia’s invasion in February, which Moscow calls a “special military operation”, with maritime insurance companies based in Lloyd’s of London and the wider London commercial insurance market waiting for more insurance given the potential losses of each ship.
Insurance for the ships would be possible “if a sensible solution was offered”;, says Rory Colacicchi, partner at insurance broker McGill and Partners.
“There would have to be escorts, minesweepers, so an insurer could say, ‘It’s given us the satisfaction that it’s not just a gamble.’ At the moment, it’s just a gamble, you could not go.”
An acceptable escort can be provided by joint Ukrainian and Russian ships, or by the UN or a neutral power such as Turkey, insurance sources said.
An aid to demining could be the use of satellite technology to identify the location of the mines, said a marine war insurer who declined to be named because of the sensitivity of the issue.
Countries such as the United States, the United Kingdom or France may have that technology, the insurer added.
The initial problem is that there are over 80 ships stuck in Ukraine – many with cargo on board including grain – that must come out before new ships can enter, sources said.
A second British broker, who declined to be named, said his company had worked to get an “insurance framework” in place for a ship willing to go into Ukraine to pick up grain once a corridor is in place. .
“The client is ready to go in from a humanitarian perspective,” said the broker.
Additional premiums charged for entering the wider Black Sea region have fallen, reflecting more confidence in providing insurance since February, industry sources said.
The extra premiums paid to enter Black Sea waters have dropped to 2% of the ship’s value from 5% shortly after the invasion, says Marcus Baker, global marine manager at broker Marsh.