Lloyd’s of London insurers and brokers are preparing to provide cover for grain shipments from Ukraine and are likely to announce their plans soon, the commercial insurance market chairman said Wednesday.
Russia and Ukraine signed an agreement on Friday, brokered by Turkey and the United Nations, to reopen war-blocked grain and fertilizer exports to alleviate an international food crisis.
“Following the agreement between Russia and Ukraine on grain exports, we are working very hard with market participants to ensure we can develop policies that support this,” Bruce Carnegie-Brown told Reuters.
“We expect brokers and insurers to announce some products that will support this in the coming days.”
Risks remain after a Russian missile strike on the Ukrainian port city of Odessa, a day after the grain deal was signed.
“It’s crucial that the agreement lasts,” said Carnegie-Brown. “A number of mines have already been planted in the Black Sea – insurers can wrap their arms around that, but they would not be able to circumvent serious breaches of the agreement.”
Premiums for the wider Black Sea region have risen sharply since the invasion, reaching as much as 5% of the ship’s value, from 0.025% before the invasion
Insurers have already expressed an interest in insuring ships passing through the grain corridor, provided there are arrangements for international naval escorts and a clear strategy to deal with naval mines.
Lancashire chief executive Alex Maloney told Reuters on Wednesday the insurer would consider providing such cover.
“We’re not risk averse. It’s definitely something we’re interested in.”
The conflict in Ukraine is likely to hit the energy sector hardest, Lloyd’s and insurance broker Aon AON.N said in a report Wednesday.
The conflict, which has led to inflation and supply chain problems, has also created problems in other sectors such as technology – including the risk of cyber-attacks – food and beverage and transportation.
More than 2,100 US-based companies and 1,200 European companies have at least one direct supplier in Russia, the report said.
“People are trying to compartmentalize what’s happening in Ukraine, and what our research shows is that it’s very interconnected,” Carnegie-Brown said.
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