Cargo insurance option is now available and triples this mechanism
The Unity Facility grain transport insurance mechanism for the Ukrainian maritime corridor, which has been in force since November 2023, will be extended to cover ships transporting not only grain but also any other cargo from February 2024. This was stated by Oliver Wyman partner Crispin Allison, Interfax-Ukraine reports.
«By combining the efforts of industry and government, we managed to create a mechanism where prices are much lower than half of those practiced in the regular commercial market. And now, at this location, we have expanded that capacity to include transportation of all cargo, not just grain,” he said in a webinar on political risk insurance organized by the U.S.-Ukraine Business Council (USUBC) and the U.S. Department of the Economy. . Business.
According to him, the mechanism formally begins on March 1, 2024, but the possibility of cargo insurance is already available and triples the insurance value.
Ellison recalled that after Russia withdrew from the Black Sea Grain Initiative, insurance rates increased only for the military risk element to about 5%, which was absolutely unaffordable and led to the suspension of shipping in July- August.
Established through a public-private partnership (PPP) in which the Ukrainian government provided an indemnity fund of US$20 million, the Unity Facility enables the insurance of approximately 1,000 ships per year with a maximum insured value of US$50 million per ship, which exports around 30 million tons of grain. The compensation fund is accessed through a letter of credit with Ukrainian banks and DZ Bank.
According to Ellison's materials, a parallel mechanism for covering cargo is being considered, supported by EBRD financing to the Ukrainian government.
The expert emphasized that a relatively small amount of insurance capital made it possible to export goods worth about 20 billion dollars, and his estimate is 6-8% of Ukraine's GDP.
The Unity Facility was created with support from the UK government, Marsh McLennan, an international reinsurance broker, and more than a dozen other UK insurance companies.
As previously reported by Compraço, in 2023, 430 ships were accepted for loading through the Ukrainian maritime corridor, 400 ships were embarked, exporting 12.8 million tons of cargo. It was the operation of the corridor that largely made it possible to increase cargo transshipment in Ukrainian ports by 5% in annual terms – to 62 million tons last year, although only the port of Odesa showed a 9% increase in transshipment to 8.4 million tons last year. period under analysis.
