"Our support for this important project builds on the work we have been doing with Ukraine this year to evaluate options for war-risk insurance. "
- John Doyle, president & CEO of Marsh McLennan
On the 22nd July 2022, Russia and Ukraine signed a deal, brokered by Turkey and the United Nations, which reopened grain and fertilizer exports previously blocked by the war. At the time, several insurers including Lancashire expressed an interest in underwriting ships passing through the grain corridor, provided there were arrangements for international navy escorts and a clear strategy to deal with sea mines.
Later that year, Marsh, Ascot, and other leading insurers launched the grain insurance facility, providing up to $50m in all-risk marine cargo and war coverage for Ukrainian food supplies shipped through the corridor established by the Black Sea Treaty. Commenting on this decision, David Roe, head of cargo at Marsh UK, said that it's “our hope that we can all work together to support international efforts and help ensure Ukrainian grain reaches the world’s most vulnerable people during this terrible time of conflict.”
READ MORE: Marsh and Ascot Group announces first placement for Ukrainian grain insurance facility
Within six months of the Black Sea Treaty, 12 out of 13 Protection & Indemnity (P&I) clubs said they would no longer be able to provide war-risk coverage across Russia, Ukraine, and Belarus from the 1st January 2023 onwards. Prompted by reinsurers, including Hannover Re, Munich Re, and Swiss Re, exiting the region, this decision affected P&I clubs American, North, UK, and West which currently cover 90% of the world’s ocean-going ships, including those from the UK and US.
This U-turn on war-risk cover for shipping across Russia, Ukraine, and Belarus diminishes prior efforts to support the Ukrainian economy, encouraging shipping firms to either sail without coverage or avoid the region altogether.
READ MORE: Ukraine: Can reinsurers continue to share war-risk to create a ‘braver world’?
Yesterday, Marsh McLennan announced that it will now work with the Ukrainian government on a pro-bono basis to design and deliver a risk data platform that will allow insurers to better assess and underwrite war-risks.
This announcement coincides with the London Conference Framework on War-Risk Insurance for Ukraine by UK Prime Minister Rishi Sunak, during which the Ukrainian government committed to sharing detailed information that will enable effective and targeted risk modelling to rebuild its commercial insurance market.
It also aligns with prior proposals made by Marsh to Ukrainian and G7 governments for the creation of a war-risk insurance pool, which would be a multinational public-private partnership based on the existing terrorism insurance pools that currently operate in several G7 nations.
Commenting on the creation of this risk data platform, John Doyle, president & CEO of Marsh McLennan, has said:
“The announcement by the Ukrainian government, together with the support of the UK government, are important steps towards the recovery of the Ukrainian economy from this ongoing and devastating war.
“Our support for this important project builds on the work we have been doing with Ukraine this year to evaluate options for war risk insurance. I am proud that our colleagues are standing together with the people of Ukraine to help them to recover as quickly as possible.”
