After the Russian Government didn’t extend the Black Sea Grain Initiative, the deal expired yesterday. As a result, ship insurers are considering suspending coverage for any ships prepared to sail to Ukraine.
The Black Sea Grain Initiative ensured a safe passage of commercial vessels carrying grain, foodstuffs, and fertilizers, including ammonia, in and out of three Ukrainian ports: Odesa, Chornomorsk, and Yuzhny/Pivdennyi. Now that the deal has expired, international news sources report that Russia made clear to the International Maritime Organization (IMO), that they will no longer be providing insurance for passing ships.
Consequently, as an insurance industry source allegedly told Reuters, some underwriters may seek to capitalise on a significant premium increase. Others will quit providing protection. However, the biggest concern is whether Russia mines the land, which would basically eliminate any type of cover.
According to Reuters, insurers are currently under discussions to decide their next move. The outcome will be quite crucial as if the companies decide to pose very high insurance costs or no insurance cover at all, it could be a major blow to global food supply and food prices.