Ukraine expands ship war insurance with Marsh & Lloyd's to iron ore, steel (updated)
01/03/2024 13:41
(Adds Oliver Wyman and Marsh comments from media call in
paragraphs 10-11, 14-15)
By Carolyn Cohn
LONDON, March 1 (Reuters) - Insurance broker Marsh
MMC.N and Lloyd's of London SOLYD.UL underwriters have
expanded a marine war insurance programme backed by Ukraine from
grain shipments to all non-military cargo, such as iron ore and
steel, Marsh said on Friday.
Marsh, Lloyd's and Ukrainian state banks launched an initial
programme in November to cut the cost of claims for damage to
ships and crew transporting grain through the Black Sea
corridor, following Russia's invasion of Ukraine two years ago.
"Expanding insurance to cover ships carrying all
non-military cargo is extremely important for Ukraine,
especially in terms of exporting metallurgical products, as the
full-scale invasion has heavily affected this sector," Yulia
Svyrydenko, first deputy prime minister of Ukraine and minister
of economy, said in a statement published by Marsh.
Ukrainian steel production contracted sharply in 2023
compared with 2021, and exports of metallurgical products fell
"several times", Svyrydenko added.
The war risk insurance programme will also provide cover for
other major Ukrainian exports such as electrical equipment and
animal fodder, Marsh said.
Standby letters of credit from state-owned Ukrainian banks
Ukreximbank and Ukrgasbank, each confirmed by Germany's DZ Bank,
offer some compensation for losses to shipowners and charterers.
The programme is backed by the Ukrainian government.
Lloyd's of London insurers led by Ascot underwrite the
insurance, which provides $50 million of hull war risk cover and
$50 million of protection and indemnity (P&I) insurance for
every voyage.
Ships typically have P&I insurance, which covers third-party
liability claims including environmental damage and injury.
Separate hull and machinery policies cover vessels against
physical damage.
War insurance rates have risen sharply in the region since
the invasion.
The existing insurance programme for grain has cut war
insurance premiums by more than half, Crispin Ellison, public
sector partner at consultants Oliver Wyman, part of Marsh
McLennan, told a media call.
However, the number of ships making use of the programme had
only been in the "single digits", Marcus Baker, global head of
marine at Marsh, told the call. The programme is also available
via other Lloyd's brokers.
Ukraine also said in January that it was discussing war risk
insurance for air transportation with Marsh.
Air traffic over Ukraine has been suspended since Russia's
invasion in February 2022.
"We are looking at trying to develop a similar facility to
allow the progressive opening of western Ukrainian air space,"
Ellison said, adding that the plans had some way to go as the
risks were greater for aircraft than for ships.
There was also limited appetite among commercial insurers to
provide cover for onshore Ukrainian businesses, he said.
(Reporting by Carolyn Cohn
Editing by Tommy Reggiori Wilkes, Tomasz Janowski, Philippa
Fletcher)
((carolyn.cohn@thomsonreuters.com; 44 207 513 4391;))