Shipowners face higher rates for Black Sea trade as reinsurers pull back: Reuters

The withdrawal of reinsurance capacity at 1 January renewals for ships exporting from Russia and Ukraine is adding further costs for insurance buyers operating in the Black Sea region, who already face war premiums up over 20%, warns a report by Reuters.

Citing unnamed insurance market sources, Reuters said all shipping firms still have cover in place but the recent round of reinsurance renewals would impact rates and reduce capacity.

Reuters said higher insurance bills have increased the costs of hiring ships and will ultimately push up the price of commodities and key shipments of grain and oil from the Black Sea.

Reinsurers pushed through war risk exclusions or restrictions for ships moving in and out of Russia, Ukraine and Belarus at 1 January 2023 renewals. This raising the risk to primary carriers from ship seizure by Russia and floating mines.

Sources told Reuters they expect rates for primary insurance buyers to reflect additional risks and higher retentions by insurers, with war risk premiums already running 20% or more higher.

“The effect of [the exit of reinsurers] is reducing [underwriting] capacity in the market for war risk and will mean people will pay more this year,” a market source told Reuters.

Reinsurance brokers said the 1 January renewal season had been tough for buyers and contracts had been completed much later than usual. Reinsurers imposed restrictions across all classes of business for risks exposed to the Russia-Ukraine conflict, the brokers explained last week.