The ongoing war in Ukraine continues to affect many business segments linked to the steel trade, including insurance. According to international sources, some ship insurers report they will cancel their war risk coverage across Ukraine, Russia and Belarus, following their reinsurers exit from the region due to the high amount of losses incurred.
In particular, reinsurers normally refresh their annual contracts with their clients on January 1, but some of them have stepped back, reporting losses resulting from war-related issues and also due to the consequences of the Hurricane in Florida. According to Reuters, P&I (protection and indemnity) Clubs American, North, UK and West are no longer eager to offer war risk cover for some liabilities in the Black Sea region from early 2023. "The Clubs’ reinsurers are no longer able to secure reinsurance for war risk exposure to Russian, Ukrainian or Belarus territorial risks," the entity stated. However, it is also noted that the withdrawal of war cover is applied to some but not to all types of policies offered by the P&I Clubs.
Overall, the issue with the reinsurers is not yet clear and market players share different opinions regarding how it may affect daily business activities in the steel sector specifically. Some sources are confident there will be no significant impact. “It won’t change anything. There was already no war risk coverage in the Black Sea anyway,” an international trader told SteelOrbis. Another trader from Turkey said there would be “no change. Our [insurance companies] are from the UK and legally cannot cancel. These [new rules] are for newcomers”, meaning the new companies starting trade and shipping in the Black Sea region. In the meantime, some market sources fear this whole insurance and reinsurance issue, if aggravated, may affect the freight rates in the region in a negative way.