Insurance market has widened the area of waters around the Black Sea and Sea of Azov that it deems high risk, as Russia’s invasion of Ukraine intensifies and perils to merchant shipping grow.
Marine insurers said in advisory dated March 7 that the high-risk area had been widened to waters close to Romania (a NATO member) and Georgia after initially adding Russian and Ukrainian waters in the Black Sea and Sea of Azov in February.
The new high-risk areas also extended to various inland waters and sections of the high seas, underscoring the increasing dangers to sailings through the whole region.
“There is clearly a growing nervousness around the region in the insurance market, especially in relation to the Black Sea,” said Marcus Baker at insurance broker and risk adviser Marsh. “Any future amendments to these areas will very much depend upon a further escalation of activity in the region.”
Guidance from the insurance industry’s Joint War Committee (JWC) is watched closely and influences underwriters’ considerations over insurance premiums.
The JWC in a market advisory pointed to three ships that had been hit around the Ukrainian port of Odessa adding that the situation “is dynamic and being closely monitored.”
“The listed areas will be re-adjusted if the JWC believe it appropriate.”
The JWC normally meets every quarter to review areas it considers high risk for merchant vessels and prone to war, piracy, terrorism and related perils. It had previously met in February before Russia’s invasion.
Niels Rasmussen, chief shipping analyst at trade association BIMCO, said there was a higher risk of Black Sea export disruption owing to shipping companies’ reluctance to service the area and because of increasing freight costs.
“Of particular concern to global supply is the export of wheat and maize, which is mainly loaded in the Black Sea (region).”