Premiums set to soar as the Russia-Ukraine crisis escalates
Maritime insurance was hesitant to cover COVID-19 last year. The onus was handed to all employers on the call to add coverage to the ever-mutating virus. Unfortunately, the sector now has the Russia-Ukraine crisis to deal with.
Rising costs and risks major contributors
With the conflict intensifying by the minute, London’s marine insurance market widened the area of waters around the Black Sea and Sea of Azov – deemed high risk. The insurance industry’s Joint War Committee (JWC) said in an advisory dated 7 March 2022 that the high-risk areas had been widened to waters close to Romania and Georgia. This came after adding Russian and Ukrainian waters in the Black Sea and Sea of Azov on 15 February 2022. The new high-risk areas also extend to various inland waters and sections of the high seas, underscoring the increasing dangers.
The JWC comprises underwriting representatives from both the Lloyd’s and International Underwriting Association of London (IUA) company markets, representing the interests of those who write marine hull war business in the London market. The IUA is the focal representative and market organisation for non-Lloyd’s international and wholesale insurance, and reinsurance companies operating in the London market.
Marcus Baker, a top insurance broker and risk adviser from Marsh McLennan noted, “There is a growing nervousness around the region in the insurance market, especially in relation to the Black Sea. Any future amendments to these areas will very much depend upon a further escalation of activity in the region.” Premiums for voyages have skyrocketed since the conflict.
Several carriers have suspended voyages to the affected regions. The United Nations’ shipping agency will convene a special meeting to discuss the worsening situation. Guidance from the JWC is watched closely and influences underwriters’ considerations over insurance premiums. The committee will make necessary adjustments deemed fit for the listed areas.
Niels Rasmussen, Chief Shipping Analyst from BIMCO, said there was a higher risk of Black Sea export disruption owing to shipping companies’ reluctance to service the area and because of increasing freight costs. Fuel is a major bugbear as carriers are reviewing their options for imposing emergency bunker fees or increasing fuel surcharges.
Marine Online Media Team
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