Ukraine war risk and geopolitics at the top of IUMI’s agenda

Marine war risk in the Black Sea and the ongoing fraught geopolitical risk environment were paramount in remarks made by Frédéric Denèfle, president of the International Union of Marine Insurance (IUMI), speaking at the association’s annual conference in Edinburgh.

Since the Black Sea Grain Corridor Initiative (BSGCI) stopped in late July, when the scheme lapsed and Russia refused to renew it, the industry “faces a new situation”, he suggested.

Until the BSGCI expired, just over 1,000 vessels transits had taken place during the year of its operation, IUMI revealed during an audience poll at the conference.

IUMI president Frédéric Denèfle told media in a pre-event briefing: “Unfortunately, this war is still very active, not only in the Black Sea, but also very close to Romania, when it comes to what's happening on the River Danube.

“Ukraine has decided to support as much as possible its agricultural exports, and therefore has proposed a new corridor for all those who would be interested in picking up some cargo in Ukraine, but it is not the same situation,” Denèfle said.

“We have seen some vessels since this new corridor had been proposed by Ukraine, taking the opportunity to leave the country – we're talking about vessels that had been stuck there for more than 16 months. We have seen at least four to five of them the latest one yesterday [16 September], being able to leave the area,” he added.

He described the war in Ukraine as having “a massive impact on international trade” since Russia invaded its neighbour in February 2022.

Denèfle also referred in his comments to the press to news on 16 September that the first two ships since the BSGCI was terminated had reached Ukrainian Black Sea ports fill up with grain.

These two ships – Resilient Africa and Aroyat – are both Palau-flagged bulk carriers, with crews reportedly consisting of people from Ukraine, Turkey, Azerbaijan and Egypt.

The ships had made the trip by hugging the Romanian coast for safety as they approached Ukraine, due to the risks involved, not least the difficulty in finding marine war insurance coverage for the voyage.

“This is very new, because up to now no vessel had gone to Odessa. We knew about vessels going to Izmail and to Reni ports on the Danube River. But that is not the most exposed area, which is close to those harbours on the Black Sea,” Denèfle said.

“We have to wait and see how this develops. We hope that everything will be done as safely as possible. It's something very new. We have to make sure that we follow each and every step taken in relation to this trade coming back between Ukraine and the rest of the world without the consent of Russia,” he added.

Geopolitical chaos

The wider geopolitical situation was a focus of Denèfle’s first day conference speech.

“Geopolitical chaos is there,” he said. “There is the ongoing Yemen war since 2016, the Venezuelan crisis in 2018. The Iran threat still going on in the Persian Gulf, which led to some attacks on oil tankers.

“There have been even coups since 2020 in Africa, the Nagorno Karabakh conflict, which is very close to Europe, and the Taiwan and China question with the risk accumulation issues that we're facing,” he continued.

“Those developments are a major concern for marine war insurance, and marine war insurers are part of the marine insurance industry,” he added.

Denèfle described the war between Russia and Ukraine as “the climax of this geopolitical situation”, emphasising its global consequences.

“This war is now extended to maritime trade. The spike of such a poor geopolitical landscape…has a lot of impacts on shipping and food supply to the rest of the world,” he said.