Unity Facility insurance expanded to cover all cargo transported via Black Sea corridor - expert
MOSCOW. Feb 29 (Interfax) - The Unity Facility insurance mechanism covering grain shipments via the maritime route unilaterally established by Kiev has been expanded to cover vessels carrying not only grain but also any other goods, Crispin Ellison, a partner at consultancy Oliver Wyman, said.
"By getting the industry and government to come together, we've been able to produce a facility where the rates are well under half of those on the normal commercial market. In February, we expanded this facility to cover shipping carrying all cargo, not just grain," Ukrainian media quoted Ellison as saying on Wednesday at a political risk insurance webinar, organized by the U.S.-Ukraine Business Council and the U.S. Department of Commerce.
That is in essence a tripling of this facility, which will be formally launched on Friday, but is available now, he said.
The Unity Facility, which is a public-private partnership, in which the Ukrainian government provides a $20 million reimbursement fund, makes it possible to insure around 1,000 vessels, offering up to $50 million in hull and separate protection and indemnity risk insurance per vessel, a move that will enable the export of some 30 million tonnes of grain. The reimbursement fund is accessible through Letters of Credit held by Ukrainian banks and underwritten by DZ Bank.
According to materials presented by Ellison at the webinar, the parties are also considering a parallel mechanism for cargo insurance backed by European Bank for Reconstruction and Development financing for the Ukrainian government.
A relatively small amount of insurance capital has enabled exports of about $20 billion, the expert said estimating it at 6%-8% of Ukraine's GDP.
As reported, the Unity Facility was established with support from the UK government, international reinsurance broker Marsh McLennan and more than ten UK insurers.
According to data from Ukraine's Restoration Ministry, the sea route unilaterally established by Kiev and the Danube River have ensured the export of nearly 26 million tonnes of cargo, including over 18 million tonnes of Ukrainian agricultural products, since August 2023. A total of 854 vessels have been sent from the Greater Odessa ports to 42 countries.