Ukrainian govt creats new mechanism to insure ships against military risks

The Ukrainian government has created a new mechanism for insurance of ships against military risks, which will help significantly reduce insurance premiums for carriers that export and import to Ukraine by sea, the country's economy ministry said in a statement.

The new insurance scheme became possible thanks to cooperation with the leading British companies in the field of reinsurance, Marsh McLennan and underwriters Lloyd's of London through the Unity Facility mechanism.

The total amount of coverage under this program is USD 50 million.

"After Russia's withdrawal from the grain deal, many cargo ships were trapped. The decision adopted by the government will ensure the safety of shipping, contribute to the stability of sea transportation, and also ensure the stable export of Ukrainian products through the ports of Ukraine," Ukrainian economy ministry Yuliia Svyridenko was quoted as saying.

The decision, first of all, will positively affect the work of grain traders, reducing the cost of grain insurance by approximately 2.5 per cent from the cost of the insurance tariff, which in turn will allow grain traders to save about UAH 100 to 140 [USD 3 to 4] per ton of cargo.

In general, this will bring up to UAH 4 billion to Ukrainian farmers, which will be directed to agricultural producers both in the form of an increase in the purchase price and for additional purchases.

In the 2023-2024 marketing year, according to the forecasts of the ministry of economy of Ukraine, it is planned to export about 50.7 million tons of grain.

By mid-October 18, 7.9 million tons of grain had been exported from Ukraine, with 70 per cent of them by sea.

Ukraine resumed sea imports thanks to the launch of a new transport corridor in the Black Sea without Russia, leading to insurance rates in the corridor falling significantly.