Black Sea vessel insurance costs rise fivefold after attacks in Romania and Bulgaria’s exclusive economic zones

The cost of insuring vessels in the Black Sea has increased fivefold over the past two weeks, from 0.1% to 0.5% of a vessel’s value. The increase was driven by heightened risks following attacks on vessels in the exclusive economic zones of Romania and Bulgaria, said Konstantin Sobol, a freight broker, shipowner and founder of Marelis Navigation S.A.

According to Sobol, the 0.5% rate was confirmed by insurers as of October 6. Market participants expect the rate to rise further to at least 1%, although this remains a forecast for now. Higher insurance costs could directly affect the cost of transporting Ukrainian grain.

Sobol gave the example of a 5,000-dwt vessel worth $1.5 mln. At an insurance rate of 0.5%, the premium amounts to $7,500, or about $1.5/t of cargo. If the rate rises to 1%, the insurance premium would reach $15,000, adding about $3/t to grain transportation costs.

At the same time, shipowners can avoid the additional insurance premium by sailing along the coasts of Romania and Bulgaria within the 12-nautical-mile zone of their territorial waters. According to Sobol, around 90% of the transit fleet currently uses this route.

He noted that following the attacks, risks for shipowners are no longer limited to calls at Ukrainian ports but cover the entire route through the Black Sea. If attacks spread to the territorial waters of Romania and Bulgaria, insurance conditions could change again, putting additional pressure on the cost of transporting Ukrainian cargo.

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Tags: export, Romania, Black Sea region, insurance, war, Black Sea grain corridor, Ukraine, Russia, Bulgaria