Ukraine is finalizing the development of a scheme to insure ships for the transportation of grain through the Black Sea

Ukraine is finalizing a scheme with global insurers to cover grain carriers entering and leaving Black Sea ports. The agreement may cover up to 30 commercial vessels. This was announced by Deputy Minister of Economy of Ukraine Oleksandr Hryban in an interview with the Financial Times.

It is noted that Ukraine is finalizing work with global insurers to insure grain ships traveling to and from Black Sea ports, a vital step in the country’s efforts to create a safe corridor for exports after Russia withdrew from a UN-brokered deal last month.

Hryban said that the agreement is “currently being worked out and actively discussed” between the relevant ministries, as well as local banks and international insurance groups, including Lloyd’s of London.

Such an agreement “could reportedly be put in place as early as next month, and it could involve between five and 30 vessels passing through what he called a dangerous spot in Ukrainian waters.”

“It depends on how the structure will develop and what will be the level of risk sharing between the state and private insurance companies,” Hryban said.

Given the war risks, affordable insurance would be necessary to revive commercial shipping activities on any significant scale, the FT writes.

Marcus Baker, head of shipping, cargo and logistics at Marsh, said that “a public-private partnership with insurers working in tandem with the Ukrainian government would give shipowners more confidence to get back to shipping Ukrainian grain around the world to the countries that need it most.”

“The details are not yet finalized, but people involved in the discussions said the agreement would aim to protect ships entering and leaving Ukraine’s ports from damage, and the risk could be shared between insurers and a local state bank,” the newspaper notes.

Hryban added that “part of the risk is likely to be supported by the country’s state road fund, which was created to repair Ukrainian roads and is financed by a fuel sales tax.” This agreement, as indicated, will replace another one announced a year ago.

Lloyd’s Insurance Group said that the agreements allowing Ukraine’s agricultural exports to continue were “crucial to addressing risks to global food security” and that it continues to work to facilitate grain supplies.

Tags: Ukraine, Black Sea grain corridor