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october 2022 year
october 2022 year
Placement Officer Alexander Nasanchuk
exclusively for Economic truth

How Ukrainian grain is insured after 3 months of the "Istanbul Agreements"

Placement Officer Alexander Nasanchuk
exclusively for Economic truth

Three months have passed since the "Istanbul Agreements" on October 22, thanks to which Ukraine began to actively transport grain from the ports of Odesa to Turkey and other countries through the Bosphorus Strait.

Ukraine signed grain export agreement with the UN and Turkey, which signed the same agreement with Russia. That made possible to unblock grain exports.

The mere fact of announcing such an agreement led to a 3% drop in prices for a key benchmark for the global market - Chicago Wheat Futures.

According to the Istanbul Agreements, the parties reached an agreement on the export of Ukrainian grain (as a rule, it is wheat, corn and sunflower oil) from three ports - "Pivdenny", "Chornomorsk" and "Odesa".

Now, on average, 25,000 - 50,000 tons are transported at once according to BritMark experts’ estimation. We do not advise our customers to ensure their shipments based on the ICC-B and ICC-C named risk lists due to the limited coverage.

The classic exception to each of the mentioned bases is war. By default, coverage of war-related risks is not provided due to the high probability of such risks and the lack of practical possibility to accurately establish the cause of the loss. Insurers stopped covering Black Sea transportation after February 24.

Even after the relevant agreements have been reached, there is still a danger of ships colliding with floating mines, which has an impact on insurers' decisions regarding the insurance of cargo ships from Ukraine.

Previously, an agricultural company that wanted to export grain could come to any insurance company and get the service without any problems. Today agricultural producers can bypass dozens of insurance companies and get a refusal.

BritMark now effectively places our clients' risks with the most comprehensive ICC-A coverage. When necessary, we offer additional risks, such as war, or riots and strikes, which were almost impossible to insure a few months ago.

The war made adjustments to the timing. Compared to pre-war times, it takes longer to place risks due to product complexity and optional reinsurance.

You need at least a week or two for effective risk placement. Therefore, it is important for Ukrainian farmers to avoid situations where insurance is needed "for yesterday".

The author of the article is Oleksandr Nasanchuk

Source NV Business