(Reuters) – London’s marine insurance market has widened the area of waters around the Black Sea and the Sea of Azov that it deems high risk as the Russian invasion of Ukraine drags on. intensifies and the dangers to merchant shipping increase.
The insurance industry’s Joint War Committee said in a notice dated March 7 that the high-risk zone had been expanded to waters near Romania and Georgia after initially adding Russian and Ukrainian waters in the Black Sea and the Sea of Azov on February 15.
At least five commercial ships have been hit by projectiles since Feb. 24, including one ship that sank and another on which a sailor was killed by a missile that hit the vessel.
The new high-risk areas also extend to various inland waters and sections of the high seas, highlighting the growing dangers.
“There is clearly growing nervousness in the region in the insurance market, particularly in relation to the Black Sea,” said Marcus Baker of insurance broker and risk adviser Marsh Specialty. “Any future changes to these areas will very much depend on a further escalation of activity in the region.”
Insurance premiums for trips to the region have skyrocketed since the Russian invasion on February 24, an action Moscow calls a “special operation”.
Many shipping lines have suspended crossings to affected ports and the UN shipping agency will convene a special meeting this week to discuss the worsening situation.
Advice from the Joint War Committee is closely watched and influences insurers’ considerations on insurance premiums.
The JWC advisory highlighted three ships that had been hit around the Ukrainian port of Odessa, adding that the situation was “dynamic” and being closely monitored.
The areas listed will be readjusted if the JWC deems it appropriate, according to the guidelines.
The JWC normally meets quarterly to review areas it considers high risk to merchant shipping and prone to war, piracy, terrorism and related perils. It had already met in February before the Russian invasion.
Niels Rasmussen, chief shipping analyst at trade association BIMCO, said there was a higher risk of disruption to Black Sea exports due to shipping companies’ reluctance to serve the region and the increase in freight costs.
“The export of wheat and maize, which is mainly loaded in the Black Sea (region), is of particular concern for global supply.”