A RETURN to widespread commercial war risk cover for ships calling at Ukrainian Black Sea ports is difficult to envisage unless some sort of parastatal backing from the Ukrainian government is made available, the president of the International Union of Marine Insurance has warned.

Frédéric Denèfle, whose main job is managing director of French war risk consortium Garex, made his comments in an interview with Lloyd’s List as the organisation’s annual conference opened in Edinburgh on Sunday.

Most shipowners stopped calling at Ukrainian Black Sea ports in July after the collapse of a scheme under which Russia allowed exports of wheat, corn and fertiliser bound for emerging markets.

Since the end of the Black Sea Grain Initiative, Russia — which invaded its neighbour in February 2022 — has threatened to treat neutral vessels as a legitimate military target. Any attack on merchant shipping would almost certainly constitute a war crime.

However, there are recent reports that five stranded laden vessels departed the Odesa region despite the Russian ultimatum.

Denèfle said that while he presumed bulk carriers Primus (IMO: 9310757), Anna-Theresa and Ocean Courtesy (IMO: 9465198) had some sort of insurance in place, details of any cover were not public.

Oleksandr Kubrakov, Ukraine’s infrastructure minister, announced the first commercial arrivals to the port of Chornomorsk during the weekend. 

Underwriters can use their own judgement on what risks to write, and cover was likely placed commercially, presumably at a high price, to reflect the substantial degree of risk involved.

But given Russia’s current stated attitude, readiness to follow this lead is probably limited.

“The war risk insurance market is looking at what is going on now and the local evolution of those vessels heading to the Odesa region. The devil is in the detail and there are a lot of details,” Denèfle said.

“We are looking at that to understand whether this is the starting point of regular traffic or just standalone operations.

“We don’t know what will be the military situation around those vessels. We hope everything will be realised without any damages for anyone.”

One possible solution is a scheme led by leading broker Marsh, which has said that it is talking to the Ukrainian government about a scheme in which Ukraine will take the first layer of risk.

Commercial underwriters could then offer cover more cheaply than they can do at present, while still making a commercial profit.

Denèfle said he did not know how those negotiations were progressing, although an announcement is expected shortly.

“Various things could be organised, one is public back-up by the Ukrainian authorities, but that has to be first understood and then tested. It’s a difficult type of agreement to organise," he said.

However, there are historical precedents, he pointed out. For instance, the French government reinsured marine war risk during both the First Indochina War against Vietnam in 1946-1954 and the Algerian War of Independence between 1954-62.