War-Risk Premiums (EWRI): Updated Market View

UkrAgroConsult

EWRI for Ukrainian deep-sea ports moved slightly higher in the last 5-6 weeks being now at  0.45–0.55% of vessel value per voyage. It is still far below the 1.0–1.2% peaks of 2023, but still is considered as mirroring the increasing war risks. The tariffs lower level can be supported by Ukrainian Gov’t and international insurance and reinsurance companies and programs, even if new incidents happen in the Black Sea.

War-risk premiums for russian Black Sea ports rose considerably. Now calls to russian ports priced at 0.65-0.80%, in many cases slightly above Ukrainian levels.

Black Sea tension is a recognized factor now, but EWRI for Romania, Bulgaria, Turkey are much lower.  For Constanța, Burgas and Turkish ports, war related risks increased additionally by 0.10-0.25%.

russian ports insurance tariffs increased the most. EWRIs of Constanța, Burgas, Turkey are discounted. This improves price competitiveness, especially for long-distance routes.

Forecast: Black Sea & Danube Insurance Rates

Tension in the Black Sea & Danube region in November may promote short, but impressive  rise in both cargo and vessel insurance. War-risk pricing remains highly volatile, if risk goes up, the rates follow immediately, after the situation turns into more quiet, underwriters adjust the rates quickly.

The market expects a moderate upward correction in cargo insurance.

• Base case – insurance rate increases by 3-5%.
• Pessimistic case – increase by 6-10% if geopolitical pressure escalates.

The outlook follows the scenario of 2022–2024, when the Grain Corridor blockade encouraged grain cargo insurance by 5% and higher.

War-risk premiums for vessels insurance are also expected to rise.

• Base case – increase by 2%.
• Pessimistic case – by 3-5% or more if the tensions continue.

During 2023, similar insurance tariffs climbing were offset by a sharp rise in short-haul freight on the Danube-Constanța route, reaching as high as USD 100/mt. Today the same costs are around €10/mt, and Danube grain terminals are under-loaded/ Most likely, higher insurance will fall directly on exporters and owners this time.

The current support programs, including Unity Facility, AGRI-Ukraine, international underwriters (Lloyd’s, IUMI), and donor-funded reinsurance, can promote war-risk costs being more stable. If so, vessel insurance may be near 2% even in a higher-risk environment.

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Tags: Ukraine, Russia, Bulgaria, Turkey, Romania, Black Sea region, freight rates, war, Danube ports, Black Sea grain corridor