LONDON (Reuters) – A cargo insurance facility that provided coverage for grain shipments from Ukraine via a safe sea route has been temporarily suspended after Russia’s withdrawal from the United Nations-backed agreement, according to broker Marsh on Tuesday.
Moscow’s decision to back out from the year-old grain export deal has raised concerns at the United Nations about the potential for hunger worldwide.
The marine cargo and war risk insurance facility, led by Ascot, a Lloyd’s of London insurer, along with other underwriters, offered coverage up to $50 million per cargo.
“Currently, it’s on hold,” said David Roe, the head of UK cargo at Marsh, who served as the broker for the facility. “It has been suspended due to the agreement not being extended.”
“Without the existence of the safe sea route, there is a greater level of uncertainty surrounding the associated risks.”
Ascot declined to provide a comment.
Insurance coverage has been crucial to ensuring smooth shipments through the designated corridor.
Russian forces attacked Ukrainian ports on Tuesday, with the Kremlin cautioning that attempts to transport grain from Ukrainian Black Sea terminals without security guarantees from Moscow would involve significant risks, as Kyiv utilizes these waters for military purposes.
“We anticipate that there will still be some form of coverage, although it may come at a challenging price,” explained Marcus Baker, Marsh’s global head of marine and cargo, in a separate statement.
“Preserving the safety and well-being of the crew remains a top priority for every shipowner.”
Additional war risk insurance premiums, which apply when entering the Black Sea region, must be renewed every seven days.
Already costing thousands of dollars, these premiums are anticipated to rise further. Additionally, shipowners may hesitate to send their vessels into a war zone without Russia’s agreement. The presence of floating mines also presents a risk.
“When comparing the current situation to that of three or four weeks ago, the whole region is now a more dangerous area,” commented Baker.
The Lloyd’s of London insurance market has already designated the Black Sea region as a high-risk area.
(Reporting by Jonathan Saul; Editing by David Goodman and Jan Harvey)
Credit: The Star : News Feed
