Insurers raised premiums for Black Sea ships due to “war risks”

Insurance companies that work with ships calling at the Black Sea ports of Russia have notified charterers of an increase in premiums for “war risks”. The agency reports Reuters with reference to four traders. The size of the risk premium, according to these sources, increased from 1% to 1.2-1.25% of the value of the cargo.

Initially, a premium for so-called war risks was introduced and added to the total cost of tanker insurance in 2022 after the outbreak of the conflict in Ukraine. But after exit Russia from the grain deal in July 2023, such risks, the agency notes, have increased even more. “Volumes coming from Russia are associated with higher risks than others, although the current situation gives insurers a lot of reasons to raise prices for everyone who works in Russian Black Sea ports,” one of the traders told the agency.

According to traders, the increase mainly affected ships carrying Russian oil and oil products. With the new rates, the cost of a voyage to India for a Suezmax-class tanker – which can carry from 120,000 to 200,000 tons of oil – will increase by $200,000, and the premium will approach $1 million. Despite the fact that this amount is small, it increases Russia’s overall cost of oil exports, the agency notes. At the peak of deliveries and the sanctions crisis, according to Reuters, the cost of Russian companies for the insurance and transportation of one tanker was up to $20 million, that is, about a third of the cost of the cargo.

Alena Miklashevskaya