Insurers await Russian response as vessels head to Odessa

The president of the International Union of Marine Insurance (IUMI) has told Emerging Risks the marine insurance sector is holding its breath as the opening day of its annual conference saw news of vessels heading to the war-torn port of Odessa to begin exports of Ukrainian grain.

As delegates arrived in Edinburgh Frédéric Denèfle President (above) said the two, vessels heading through the Black Sea towards Odessa are paying their first visit to the port since Russia’s invasion and at a time when another vessel which has been trapped in Odessa since the conflict began headed out from the port.

IUMI continues to monitor the situation with the war in Ukraine,” he said. “It is still very active and for marine insurers the situation is still difficult in the Black Sea and in Romania and the Danube.

“We saw the end of the grain corridor in July, and Ukraine is keen to see a new corridor established.”

Denèfle added: “We have seen vessels trapped in Ukraine’s port for 16 months but there have been four or five which have left the ports in recent times and we have seen another leave Odessa this week.”

However, it is the news that two cargo vessels are heading into Odessa which has opened up new issues for marine insurers.

“The two new vessels entering the Ukraine port area and heading for Odessa are likely to look to restart the trade in grain,” he added. “No vessels have gone to Odessa and while the hope is that grain can be exported it will depend on the reaction of Russia.”

Denèfle said there were no details of who was insuring the vessels but explained: “It might be that the Ukrainian government has said they will indemnify the shipowners should something happen. However, if they are insured in the market then the premium is likely to match the risk.”

“The real issue is how Russia will react to the vessels. If they fire on the vessels, then the efforts will I suspect immediately cease as the crews will be reluctant to expose themselves to such a threat. As insurers we will be waiting to see how Russia reacts.”

Denèfle saw the war risk market was still tough. “The reinsurers were not willing to commit capacity in January, and nothing has changed, and we are unlikely to see any change at 1 January 2024,” he explained. “We have to keep working with our clients to address the risks they face. Ukraine will feature in a number of the sessions over the length of the conference given the impact it has had and the future implications.”