Ukraine negotiates with international insurers for the operation of the “grain corridor”
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Ukraine is finalizing work with the international insurance market on the insurance scheme for grain ships bound for Black Sea ports – the funds for the coverage will be partially taken from the “road fund”.
It is reported Financial Times with reference to the words of Oleksandr Hryban, adviser to the Minister of Economy.
According to Hryban, the agreement “is currently at the stage of development and active discussion” between the relevant ministries, as well as Ukrainian banks and international insurance groups, in particular – Lloyd’s of London.
Ukraine is also advised on a free basis by the Marsh McLennan professional services group, which includes the consulting company Oliver Wyman and the world’s largest insurance broker Marsh.
The scheme can become operational as early as September, and can cover from 5 to 30 vessels that will pass through the “dangerous zone” of Ukrainian waters. The number of ships will depend on how the structure works and the level of risk sharing between the government and private insurance companies.
Details have yet to be finalised, but FT people familiar with the discussions said the scheme would aim to protect ships from damage and risk could be shared between insurers and a local state-owned bank.
One of the interlocutors said that the bank can provide a letter of credit as collateral. A letter of credit is an obligation of the foreign buyer’s bank to make payment after the exporter ships the goods and provides the necessary documentation to the exporter’s bank as proof.
According to Hryban, the state part of the risk will probably be covered by the state road fund, which was created to repair Ukrainian roads and is financed by the fuel sales tax.
Ukrainian government officials believe that coastal defense systems can protect the corridor within 100 nautical miles of the coast. But given the risks of war, affordable insurance is essential to the revival of commercial shipping on any significant scale.
Marsh’s global head of shipping and logistics, Marcus Baker, noted that “a public-private partnership with insurers working in tandem with the Ukrainian government will give shipowners more confidence to return to shipping Ukrainian grain around the world to those countries that most need it”.
Read also: The birthday of the “grain corridor” and the day of the end. How Ukraine once again found itself in a sea blockade and what threatens it
We remind you:
In the morning of August 16 container ship “JOSEPH SCHULTE” (Hong Kong flag) left the port of Odesa and moves along the temporary corridor established for civilian vessels to/from the Black Sea seaports of Ukraine. This vessel has been in the port of Odesa since February 23, 2022. It will be in two days arrived to Istanbul in Turkey.
The last ship with Ukrainian food left the port of Odesa on July 16 – the last day before the withdrawal of the Russian Federation from the “grain initiative”. After that, Russia repeatedly attacked the Ukrainian port grain infrastructure.
Later, Ukraine announced temporary corridors in the Black Sea for merchant vessels heading to and from Ukrainian ports. It will be used primarily to evacuate ships stuck in Ukrainian ports.
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