Ukraine is near to finalising a scheme with global insurers to provide coverage for ships transporting grain to and from its Black Sea ports, reported the Financial Times.
After Russia backed out from the UN-Turkey-brokered Black Sea grain deal, a scheme of this nature would be a major step towards creating a secure corridor for Ukraine-bound ships alongside enabling the continued exportation of vital commodities like grain.
According to the Financial Times, Ukraine’s special envoy for its Economy Ministry, Oleksandr Gryban, reported that the deal was “currently being pursued and actively discussed” between the relevant parties. Discussions have also extended to local banks along with international insurance groups, including Lloyds.
Gryban said the scheme could become effective as early as September and as many as five to 30 ships could be insured to travel through the more contentious waters surrounding Ukraine.
“It depends on how the structure goes and what the level of risk-sharing is going to be between the government and private insurance companies,” Gryban stated.
Having affordable insurance is crucial for revitalising commercial shipping operations on a substantial level, reported the Financial Times.
The scheme would cover ships travelling in and out of Ukrainian ports against damage, while the risk is shared between insurers and a local state-owned bank.
This arrangement effectively displaces a scheme that provided war and cargo coverage for grain supplies exported from Ukraine in 2022 before expiring when the grain trade agreement between the Ukraine and Russia fell apart.
Lloyd’s emphasized that securing agreements to sustain the export of agricultural goods from Ukraine were “crucial in addressing risks to global food security”. They further stated that they are actively engaged in efforts to facilitate the transportation of grain, according to the Financial Times.
Following its withdrawal from the grain deal, Russia declared it would deem any foreign vessel leaving a Ukrainian port as a military target, making attempts to secure insurance that much harder for the transportation of grain.
For instance, some insurers who incurred heavy losses during the war, have conditioned their coverage with some form of risk-sharing to offset the risk of doing business within hostile areas.
“A public-private partnership, with insurers working in tandem with the Ukrainian government, will give greater confidence to shipowners to return to delivering Ukrainian grain around the world to those countries that need it most,” said Marcus Baker, global head of marine, cargo and logistics at Marsh.
This latest development comes a week after Ukraine announced that a containership left the Port of Odessa through the country’s newly introduced “humanitarian corridor”.