Underwriters are charging as much as 10% of the value of a ship’s hull

The cost of insuring merchant ships sailing to ports in the Black Sea has spiraled out of control, according to Bloomberg.

The agency says underwriters are charging as much as 10% of the value of a ship’s hull – basically the vessel’s worth as an asset – for what is called additional war-risk premium.

A $50 million, five-year old tanker hauling a standard 1 million-barrel Russian cargo would need $5 million just in insurance premiums – about $1.5 million above the cost of hiring the carrier, Bloomberg says.

It costs about $3.5 million to hire a tanker to take a million-barrel cargo to Italy from the Russian Black Sea port of Novorossiysk compared with less than $700,000 earlier this year, according to industry data compiled by Bloomberg.

On February 24, Russian President Vladimir Putin announced a “special military operation” in Donbass. The USA and other NATO and EU countries expressed disapproval of Russia’s actions. A package of sanctions has been imposed on Russia, its Central Bank, NWF, the Ministry of Finance, state banks and companies. The largest international operators such as Maersk, Mediterranean Shipping Company (MSC), CMA CGM, Hapag Lloyd and ONE have announced suspension of cargo bookings to/from Russia.