Insurance companies and brokers in London have signaled that regulations could be made to cover ships that will engage in grain trade from Ukrainian ports, in the corridor cleared of mines in the region, and only with the escort of international naval vessels. The “Grain Shipment Agreement” for the creation of a corridor for Ukrainian grain trade passing through the Black Sea was signed in Istanbul on July 23, 2022, between Turkey, Russia, Ukraine, and the United Nations. According to this agreement, the first step will be the unloading of grain and similar food products through 3 Ukrainian ports. The implementation and supervision of the plan will take place from a center to be established in Istanbul.
Lloyd’s of London and other insurers are in agreement that with the war that started in February, the Ukrainian ports are still closed, and the insurance market is seeking more guarantees for ships that are still working or are potentially at risk in the region. Insurance brokers state that “if suitable conditions are met,” insurance companies may reach an agreement on insuring ships in the region.
According to insurance sources, there is a consensus that an acceptable military escort could be provided jointly by Russia and Ukraine, or by the United Nations or Turkey. Due to the sensitivity of the issue, an insurance broker who refused to give their name said that satellite technology could be used to identify the locations of mines, which might help with mine clearing. They also added that countries like the US, UK, or France may possess this technology.
Sources stated that the first issue is that over 80 ships stranded in Ukraine, many of which have cargo including grain on board, must leave before new ships can enter. Another broker based in London, who declined to be named, said that their firm is working on creating a “suitable policy” for ships that wish to go to Ukraine to extract grain once the corridor is established.
Industry sources agree that the additional premiums for traveling to the Black Sea region have decreased, reflecting more confidence in providing insurance since February.
In general, when evaluating the situation, insurers and brokers in London are signaling that they can offer more suitable policies for ships that will carry out the safe evacuation of grain from Ukrainian ports by establishing a secure corridor, and work on these policies is ongoing.
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