UK PM Sunak Assists Ukraine with Deal for War Risk Insurance for Bulkers
Ukraine’s Prime Minister Denys Shmyhal announced that a new agreement has been reached to assist the ships sailing the Black Sea corridor with war risk insurance. It is the latest in a series of steps taken for insurance and comes at a critical time after a bulker in a Ukrainian port was struck by a Russian missile.
Without providing specific details, Shmyhal called the new agreement “strategically important” for free navigation in the Black Sea. His announcement comes as Ukraine is again working to reassure the shipping community to maintain the vital export trade. Using the corridor launched in August 2023, Ukraine has been able to export iron ore and metal products in addition to grain and the Prime Minister is saying the new agreement will make the Black Sea Corridor more accessible to a wider range of exporters.
“According to the results of the agreements between the President of Ukraine Volodymyr Zelenskyi and the Prime Minister of Great Britain Risha Sunak, Ukraine together with a pool of British insurance companies formed a special mechanism. It will allow a discount on the cost of insurance against war risks for exporters of all products from Ukraine,” wrote Shmyhal on social media.
He said a total of 14 UK insurance companies have agreed to participate in the effort, which he highlighted as the latest step in support from the West. He also reported that the Multilateral Investment Guarantee Agency of the World Bank Group (MIGA) has already provided over $166 million in insurance coverage with negotiations ongoing for new projects. The U.S. International Development Finance Corporation (DFC) also recently approved five new projects worth over $380 million and Shmyhal said negotiations are ongoing with the European Bank for Reconstruction and Development (EBRD) for additional trade insurance.
These moves come after reports that the cost of war risk insurance tripled last week after the Liberian-flagged Kmax Ruler was hit by a missile. Reuters quoted sources saying the cost had risen from one to three percent of a vessel’s value. It was also seen to be driving up freight costs threatening Ukraine’s exports. The government has reported that it expects to harvest 79 million tons of grain and oilseeds this year with two-thirds available for export.
Despite fears that vessels would stop sailing the corridor after last week’s missile strike, today at least three ships were departing Ukraine’s ports while three others could be seen arriving in Chornomorsk. In addition, at least seven bulkers were in the anchorage near Sulina, Romania, which is used as a staging point before proceeding to Ukraine.
Ukrainian officials reported yesterday that 100 ships have left Ukrainian ports since they launched the Black Sea corridor less than three months ago. They are saying that 3.7 million tons of food and material have been exported along the corridor.