Shipowners exporting grain and other food supplies from Ukraine will be able to source “affordable” insurance from a US$50mn facility developed by Marsh and a coalition of banks and Ukrainian government agencies.

Since the collapse of the Black Sea Grain Initiative in July, seaborne exports from Ukraine’s ports have been hampered by steep premiums demanded by insurers to cover the risk of damage from Russian bombardment, mines and other hazards from the war.

Under the programme, dubbed Unity and announced today, Lloyd’s insurers draw on a backstop from the Ukrainian government to underwrite protection and indemnity war risk insurance to shipowners and charterers.

The facility is backed by standby letters of credit issued by ECA Ukraine, the country’s export credit agency, Ukreximbank and state-owned Ukrgasbank. Confirmed by Germany’s DZ Bank, the letters of credit will be used to reimburse insurers when claims arise. The facility is also backed through a guarantee issued by Ukraine’s economy ministry.

Marsh created the facility and arranged the underwriting capacity, but says it will also extend the facility to clients of rival brokers. A spokesperson for the company says Ascot is acting as the lead insurer, with another 12 to 14 insurers supporting the facility. Norton Rose Fulbright provided legal advice.

The spokesperson did not say how many voyages the facility is expected to support, but noted that the defunct Black Sea initiative carried just over 30 million tonnes of grain and other foodstuffs.

Russia pulled out of the arrangement after failing to secure international agreement to several demands, including reconnecting the Russian Agricultural Bank to the Swift payment network. Shipments by sea have continued since the deal’s demise, but at a slower pace.

“The launch of the Unity facility will enable Ukraine to provide vital food supplies to the world at the same time as supporting the Ukrainian economy and keeping the Black Sea open for international trade,” Ukrainian Prime Minister Denys Shmyhal says in remarks distributed by Marsh.

“This partnership between the Ukrainian government, Marsh McLennan and Lloyd’s of London is a sign of confidence in our economy and demonstrates that Ukraine is open for business.”

Marcus Baker, Marsh’s global head of marine, cargo and logistics, says: “The creation of this public-private partnership, with insurers working in tandem with the Ukrainian government and its banks, will accelerate the urgent resumption of vital grain exports amid the ongoing effects of this brutal conflict.”

“Unity’s unique structure will enable underwriters to price risks at more affordable levels than those experienced in recent months.”

UK broker Miller said in September that it was offering war risk insurance to vessels calling at Ukraine’s Black Sea ports, in conjunction with unnamed Ukrainian authorities.

Ukraine says Russia’s military has repeatedly targeted civilian shipping routes from its Black Sea ports, while Ukraine has targeted Russian warships operating off its coast.

Last week officials in Ukraine said a harbour pilot was killed and three crew members injured when a Russian anti-radar missile hit a cargo vessel entering Odessa’s port, the BBC reported.

Ukrainian agricultural produce has also been exported by land and waterway through neighbouring countries such as Romania, Moldova and Poland, although the shipments have been disrupted amid bitter opposition from local grain growers.