Insurers are reviewing whether to freeze cover for any ships willing to sail to Ukraine after Russia said on Monday it will suspend participation in a U.N.-backed deal that allows the export of grain through a Black Sea safe corridor, sources said.
The agreement, brokered by Türkiye last July, aimed to alleviate a global food crisis by allowing Ukrainian grain blocked by the Russia-Ukraine conflict to be exported safely. It will expire at the end of the day on Monday.
"Due to the collapse of the Black Sea corridor deal, most shipowners will now refrain from calling Ukrainian ports," Christian Vinther Christensen, chief operating officer with Danish shipping group NORDEN told Reuters.
The last ship left Ukraine under the deal on Sunday.
Insurance has been vital to ensure shipments through the corridor and industry sources said the suspension by Russia was being evaluated in terms of whether cover in some form could continue.
"Some underwriters will look to take advantage with a hefty increase in rates. Others will stop offering cover. The (key) question is whether Russia mines the area which would effectively cease any form of cover being offered," one insurance industry source said.
The Lloyd's of London insurance market has already placed the Black Sea region on its high-risk list.
"Annual cover remains in place but voyages to listed areas will be assessed individually as and when seen," Neil Roberts, head of marine and aviation at Lloyd's Market Association, which represents the interests of all underwriting businesses in Lloyd's.
Additional war risk insurance premiums, which are charged when entering the Black Sea area, need to be renewed every seven days. They already cost thousands of dollars and are expected to go up, while shipowners could prove reluctant to allow their vessels to enter a war zone without Russia's agreement.
"I don’t believe there are many enquiries at the moment as getting an owner to operate on past charter terms without an initiative would be difficult," another industry source said.
"Danger money hire rates would probably be required, aside from the provision for extra insurance costs."