Black Sea war insurance impacted by instability

The availability of war insurance to shipping firms operating out of the Black Sea will be impacted by further instability in the region, following warning shots fired from a Russian warship at a cargo vessel at the weekend, an expert said.

Mark Costin, commercial directors at insurtech Insurware, said: “Only a finite number of insurers will continue to see the value and opportunity in providing insurance.”

Buyers will see less competition in the market, with insurers focused more on aggregation of capacity, he warned.

“Coverage and price are key. Aggregation of values and exposures become the key metrics,” Costin said. “Insurers must determine what capacity they are comfortable providing and at what price. The ability to dynamically track the changing aggregation exposure informs almost every decision thereafter.”

Rates for war risk insurance premiums in the region are renewed every seven days.

Ships are backing up in the Black Sea shipping lanes as shipowners and their insurers take stock after the incident. It follows Russia’s decision to exit the UN-brokered grain export scheme in July, which provided a safe corridor from Ukrainian ports through the Black Sea.

The Sukru Okan was targeted by a Russian warship on its way to a Ukrainian port after it failed to respond to a request for an inspection. Ukraine called the action “provocative” and comes just days after the country announced a humanitarian corridor in the Black Sea to free up cargo ships trapped in Ukrainian ports since Russia’s invasion.

This week, the BBC reported merchant ship Joseph Schulte left Ukraine’s Odesa port for the first time since Russia’s invasion of Ukraine in February 2022. Ukraine said the Joseph Schulte was the first vessel to use the new temporary corridor.