War insurance prices are rising for ship owners

War insurance prices for ships heading to the Black Sea have risen again, and insurance companies are reviewing policies daily as the conflict in Ukraine affects shipping routes, transport and insurance sources reported on Thursday. 

The Black Sea is very important for the transport of grain, oil and oil products. Its waters are used by Bulgaria, Georgia, Romania and Turkey, as well as Russia and Ukraine. 

Turkish Foreign Minister Hakan Fidan said on Wednesday that attacks on Russian-linked tankers in the Black Sea in recent days threatened the security of everyone in the region and showed that the scope of the war in Ukraine was expanding. 

Ships sailing to Russian or Ukrainian ports or terminals in the Black Sea around the Sea of Azov require additional war risk insurance, usually set for a period of seven days. 

Previously, underwriters reviewed the terms of war insurance every 48 hours, but recent events have prompted daily reviews, the sources said. 

Russian President Vladimir Putin threatened on Tuesday to cut off Ukraine's access to the sea in response to the attacks on tankers, adding that Moscow would take action against tankers from countries that helped Ukraine. 

The difference between war insurance costs for Russian and Ukrainian ports had narrowed in the last two days. Previously, Russian ports charged higher premiums, according to the sources. 

War insurance costs for some port calls have been quoted at between 0.6 per cent and 1 per cent of a ship's value in the last day by some insurers, up from 0.4-0.6 per cent last week, they added. 

The one per cent rates would be the highest since late 2023, though still below the two per cent peaks reached in the Red Sea at the height of attacks by Yemen's Houthi militia in 2024, market estimates show. 

Small increases translate into tens of thousands of dollars in additional daily costs for insurance alone. 

One option insurers could consider is cancelling coverage altogether, although there are no signs of that happening yet, the sources said. 

Additional war premiums are likely to rise ‘if Russia's rhetoric translates into attacks on shipping in the Black Sea,’ said Marcus Baker, global maritime leader at insurance broker Marsh. 

‘We could also see an expansion in the area of increased perceived risk if there are more attacks on Turkish ships closer to Turkey.’ 

In an effort to ensure uninterrupted energy flows, Turkey has called on Russia, Ukraine and all other parties to keep energy infrastructure out of their conflict. 

Ukraine, which has been targeting Russian oil exports while Moscow bombs Ukraine's power grid, claimed responsibility for the attack on two empty tankers heading for a Russian port last week. However, Kiev denied any link to Tuesday's incident, in which a Russian-flagged tanker loaded with sunflower oil claimed to have been attacked by drones. 

‘Threat levels for tankers calling at Russian ports and vessels calling at Ukrainian ports have increased significantly,’ British maritime security company Ambrey said on Thursday, adding that shipping companies should request hull inspections to check for limpet mines after calls at Russian ports.