2023 Innovation Awards: Ukraine ‘AsOne’ Cargo Facility

Marsh
Ukraine ‘AsOne’ Cargo Facility

Russia’s 2022 attack on Ukraine, a major exporter of grain, resulted in shippers having cargo insurance suspended as underwriters exercised war exclusions.

Many of the shippers were clients of Marsh LLC, which sent the broker in search of a remedy, said Jay Payne, London-based senior vice president in Marsh Specialty’s global marine, cargo and logistics practice. Existing insurers, however, were unable to provide the coverage needed.

With the marine cargo market, which is centered in Lloyd’s of London, roiled by the continuing Russia-Ukraine war, Marsh decided to build a facility.

In June 2022, it initiated conversations with underwriters aimed at persuading them to buy into the initiative and provide capacity, starting with Ascot Group Ltd., which ultimately was the lead insurer on the AsOne cargo facility that launched in July 2022.

Mr. Payne said Marsh spoke to approximately 50 underwriters over the course of the month, with about half the insurers joining the facility and providing capacity.

“It was really navigating the market and underwriters who would take on the risk and be able to provide capacity,” he said.

The facility can provide limits up to $50 million, Mr. Payne said. So far, the largest shipment insured under the program was just in excess of $30 million in value; 125 shipments have been made using the coverage, moving more than 17 million metric tons of grain worth about $2.7 billion, according to the most recent figures available.

Initially conceived as a response to Marsh clients seeking to replace canceled cover, the facility was also opened to all Lloyd’s policyholders, Mr. Payne said. About 90% of the policyholders using the facility are Marsh clients and the remainder came through other Lloyd’s brokers.

The facility, though, was suspended July 18 after the agreement to maintain a United Nations-sponsored safe passage corridor for grain shipments, upon which coverage was dependent, was canceled by Russia, which has since said any ships in the area will be assumed to be carrying military cargo.

As of late August, Russia had shown little interest in renewing the agreement and has repeatedly bombed Ukrainian export facilities, resulting in substantial damage.

Mr. Payne said Marsh is discussing trying to maintain coverage, even in the absence of the grain export agreement. The corridor previously was closed and coverage suspended in November 2022 when Russia temporarily withdrew from the export agreement.