Insurance broker Marsh McLennan and Lloyd’s of London underwriters have expanded the Ukraine-backed marine war insurance programme from just grain shipments to all non-military cargo.
The initial programme to cut claims costs for ship and crew damages during grain Black Sea transport was launched by Marsh, Lloyd’s, and Ukrainian state banks in November 2023. Now it will expand to all non-military cargo such as iron ore, steel, and containerised shipping.
Standby letters of credit created by the state-owned Ukrainian banks Ukreximbank and Ukrgasbank, each confirmed by DZ Bank, will continue to provide a first loss compensation fund to shipowners and charterers which is supported by the Government of Ukraine.
Marsh said that Lloyd’s and other London-based insurers, led by Ascot will provide up to $50m in hull and protection and indemnity (P&I) war risk insurance. This is available to clients of all Lloyd’s registered brokers, to provide added support to ongoing humanitarian efforts and alleviate continued pressure on supply chains and global food security. 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.
“Marsh McLennan is dedicated in our support of Ukraine – helping it attract global investment to rebuild the country and recover from the devastating impact of war on its people and economy. We’re pleased to expand this public-private partnership with the Ukrainian government. It will provide exporters with lower premiums to ship a wider range of goods through its Black Sea trade routes and deliver major economic benefits to Ukraine,” said John Doyle, president and CEO of Marsh McLennan.
“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. In 2023, compared to 2021, steel production decreased by 3.4 times, and exports of metallurgical products decreased several times. Strengthening the processing industry and developing non-raw material exports are priorities for the government to enhance our country’s economic resilience,” Yulia Svyrydenko, first deputy prime minister of Ukraine and the minister of economy, added.
According to Reuters, war insurance rates have risen sharply in the region since the invasion but the existing insurance programme for grain has cut war insurance premiums by more than half. The downside is that the number of ships making use of the programme had only been in the single digits.
The media outlet also noted that Ukraine was discussing war risk insurance for air transportation with Marsh in January. As a result of Russia’s invasion, air traffic over Ukraine has been suspended since Russia’s invasion in February 2022.
