A new war risk insurance mechanism for sea carriers, approved by the Cabinet of Ministers, will help boost trade through the grain corridor.
Trade along the grain corridor will expand
Ukraine will be able to more effectively use the temporary trade corridor in the Black Sea, through which a hundred ships have already passed since July. This will be helped by the new insurance mechanism against military risks for sea carriers, which was approved by the government of Ukraine.
The decision to launch this mechanism was made by the Cabinet of Ministers of Ukraine on November 14, the government provided funds under guarantees to cover losses, Prime Minister Denys Shmyhal said. Details of the initiative were disclosed by the Ministry of Economy on November 15.
The new mechanism will reduce the cost of grain insurance by about 2.5 percentage points of the insurance rate, which will allow grain traders to save about UAH 100-140 per tonne of cargo, and will bring additional UAH 4 billion to agricultural producers, explained First Vice Prime Minister and Minister of Economy Yulia Sviridenko.
The funds will be allocated to farmers both by increasing the purchase price and for additional purchases. It is noted that the total amount of coverage is 50 million of dollars.
The implementation of the mechanism became possible thanks to cooperation with leading British reinsurance companies - Marsh McLennan and underwriters Lloyd's of London through the launch of the Unity Facility. The UK is the world's centre of marine insurance.
According to Shmygal, in general, the following mechanisms are involved:
Export credit agency;
state-owned Ukrgasbank and Ukreximbank;
corporate and investment bank DZ Bank (Germany);
a pool of 14 policyholders.
A strategically important area is free navigation in the Black Sea, which is the foundation for Ukraine's economic recovery. First of all, I would like to thank the Ukrainian Defence Forces for keeping this corridor open. It has already been used by 100 vessels, which have exported more than 3.7 million tonnes of products from Ukrainian ports, the Prime Minister said.
The mechanism will allow for a discount on the cost of military risk insurance for exporters of all products from Ukraine. This will make the Black Sea sea corridor more accessible to a wider range of exporters... This is necessary for the Ukrainian economy, for consumers around the world and especially for food security," the Prime Minister explained.
At the same time, war risk insurance is important not only in the field of maritime transport.
War risk insurance is an additional motivation for investors to invest in Ukraine. We cooperate with key global institutions that can provide guarantees, Shmyhal said.
He reminded that in addition to the new mechanism:
The Multilateral Investment Guarantee Agency (MIGA) has already provided over $166 million in insurance coverage since the start of the full-scale war. This is help to both the financial and real sectors of the economy.
The US Corporation for International Development (DFC) has recently approved five new projects worth 380 million of dollars in the spheres of food security, small business, healthcare and international trade.
Negotiations with the EBRD on trade insurance are ongoing, with the prospect of scaling up cooperation to include investment insurance.
Export credit agencies of partner countries are ready to cover investment risks for their businesses. Such opportunities exist, in particular, in Japan, Germany, France, Denmark, Italy, Sweden, the United Kingdom, and Poland.
What vessels are sailing to Odesa
On 29 October, 5 vessels with a total deadweight of 163.26 thousand tonnes arrived at the ports of Greater Odesa. The vessels belong to owners from Greece, Turkey, Liberia and Panama.
Two of the five vessels are making their second voyage in the corridor.
In addition, four more vessels with a total deadweight of more than 168,000 tonnes left Ukrainian ports, owned by shipowners from Greece and Turkey.
