Since the resumption of operations at Ukraine’s seaports in 2022, cargo insurance rates in the ports of Greater Odesa have significantly decreased. They have dropped from the initial 4-5% to the current level of 0.35-0.4% of the cargo value. This indicates a substantial improvement in conditions for maritime export and import in the region, as well as a reduction in risks for cargo owners.
This is reported by Business • Media
Factors Affecting Insurance Rates
Cargo insurance, both military and civilian, is currently divided into two main categories: military risk insurance (EWRI) and standard insurance under All Risks conditions (ICC A, GAFTA/FOSFA). According to experts, the war in Ukraine did not have a significant impact on All Risks insurance rates, except for the initial period of the large-scale invasion when rates were higher due to the poor technical condition and age of the vessels. After the ports of Greater Odesa resumed operations and the quality of the fleet improved, this factor ceased to be decisive.
Regarding military risks, the situation in the region is of utmost importance. The more damage to vessels, affected crews, and attacks by drones and missiles, the higher the insurance rates become. Since the launch of the grain corridor in 2022, military risk rates rose to 4-5%, but over time they decreased to 0.35-0.4%. According to specialists, this trend indicates an almost tenfold reduction in insurance costs. At the same time, during periods of active attacks, such as in September-October 2024, rates temporarily increased due to security circumstances.
Current Practices and Forecasts for Military Risk Insurance
Experts state that the number of insurance companies capable of covering military risks in Ukrainian territorial waters is currently limited but sufficient to meet demand. The main criteria for entering into a contract include the reliability of the insurer, policy conditions (including the amount of the deductible), duration of coverage, and response mechanisms in case of an insured event.
One example is the compensation for the damaged container ship Shui Spirit following a missile strike on the Black Sea port. Military risk insurance is becoming an important tool for protecting the interests of cargo owners in the current conditions, as there are currently no alternatives.
Forecasting the situation, specialists suggest that rates will remain in the range of 0.35-0.4%, with the possibility of decreasing to 0.25-0.3% if the situation stabilizes and potential agreements on a ceasefire in the region are reached.