An insurance facility that has enabled ships to carry grain out of Ukraine via the Black Sea despite war-related risks is expanding to include all other products, one of the facility's organizers said.
The expansion, which excludes war-related goods, is already in effect but a formal announcement will take place on Friday, March 1, said Crispin Ellison, a partner at Oliver Wyman, a consultancy of insurance brokerage Marsh McLennan.
The addition will triple the size of the "Unity facility" launched in November last year to end a costly halt to the shipping of Ukrainian agricultural commodities, Ellison said.
The program was created by Marsh Mclennan and the Ukrainian government and underwritten by Lloyds of London to insure grain ships for up to $50 million each against war-related risks.
"We've now expanded that facility to cover shipping carrying all cargo, not just grain," said Ellison. "That is, in essence, a tripling of that facility, which we will be formally launching on Friday but it's available now."
Ellison, speaking at a seminar hosted by the U.S.-Ukraine Business Council, didn't say whether the insurance limits and other conditions are the same for non-grain cargoes as for grain.
"Overall, opening up the Black Sea export corridor is worth about 6-8% of Ukraine's GDP," he added. "That's a relatively small amount of insurance capital enabling exports of about $20 billion."
The Unity facility was created last year to allow the resumption of shipping, which halted after Russia withdrew in July from a UN-brokered agreement that allowed transport in the Black Sea of agricultural commodities.
Under the facility, the Ukrainian government offers a "reimbursement fund" of up to $20 million via a letter of credit held by Ukrainian banks and underwritten by Germany's DZ Bank, Ellison said, adding that specialist war-risk underwriters from Lloyd’s of London provide normal “ground up” cover but benefit from the letter of credit in the event of a loss.
