Artem Skorobogatov
Interlegal Partner

Andrii Lofii
Lion Insurance Broker’s Representative

In the era of full-scale war, cargo insurance has shifted from a routine formality to a critical component of risk management. This article explores the evolving landscape of wartime insurance, highlighting the introduction of Extra War Risk Insurance (EWRI), rising disputes over coverage, and the practical challenges exporters face with delays, increased premiums, and limited coverage options. For businesses struggling with complexities of war-affected logistics, a robust insurance strategy coupled with professional legal support is now essential for maintaining stability and competitiveness in the global market.

In the period of global upheaval caused by a full-scale war, cargo insurance issues have gained new importance for Ukrainian exporters. If previously main concern of business was the amount of policy costs, today their predictability, stability of rules and real effectiveness of insurance coverage have come to the fore.

EWRI — A new reality and a main source of disputes

The most significant change in marine insurance market was the introduction of a war risk premium, also known as EWRI (Extra War Risk Insurance). Until 2022, this premium was perceived as a formality, but with the start of active hostilities in the region, it became an integral part of each voyage. EWRI shall be paid by shipowners, who, in turn, re-expose such costs to cargo owners.

Lately we have increasingly faced disputes between the parties regarding the payment procedure or even lawfulness of such requirements. There are cases where shipowners try to detain cargo in port due to non-payment of EWRI, despite the absence of such a right in the charter party. Some operators refuse to provide proof of their insurance costs, which creates additional tension in relationships with charterers.

Particularly risky situations concern the disputes arising upon completion of the voyage, when contractual payments have been made, while the amounts of claims can reach hundreds of thousands of US dollars.

No automatic coverage: New obstacles for exporters

After 2022, most international insurers have excluded Ukrainian ports from the list of regions of standard coverage. It means that each shipment should be agreed individually, which, in turn, causes:

• delays in issuing policies,
• increased insurance premiums,
• difficulties in concluding contracts (in particular, regarding risk allocation).

This is especially critical for businesses with low margins, where additional costs can make export economically unprofitable. As a result, in case of damage or loss of cargo (for example, due to a drone attack or common maritime risks), the cargo owner may be left without goods and without reimbursement.

When insurance does not help: General average risks

A special risk for cargo owners is general average. If the vessel’s master decides to salvage the ship or cargo (for example, during an attack or due to critical damage), the costs shall be shared between all participants in the carriage in accordance with the York-Antwerp Rules. It means that even if your cargo remains intact, you are obliged to pay a portion of salvage costs.

Without proper insurance, it may result in direct financial losses without any right to compensation.

INSURANCE MARKET TRENDS AND CURRENT RATES

Today, cargo insurance is conventionally divided into two main areas:

1. Standard cargo insurance (All Risks)

Under the terms of ICC A, GAFTA/FOSFA, rates remain relatively stable. The war had almost no effect on their level, except for the initial period in 2022, when the Danube cluster ports accepted obsolete vessels without proper classification and insurance coverage.

The main factors affecting the rate are the following:

• vessel technical condition,
• her age,
• availability of IACS classification and shipowner’s liability insurance (IGP&I).

With the start of full-fledged operation of the Greater Odessa ports, the situation stabilized: quality of the fleet increased, and tariffs normalized.

2. War cargo risks (EWRI)

Here, rates fluctuated significantly. At the start of the first grain corridor in 2022, they reached 4–5% of the cargo’s value, but today they have decreased to 0.35–0.40%. This is almost a tenfold decrease. Temporary increases occurred only during massive attacks (such as in the autumn 2024, when at least 7 ships in the Black Sea got damaged).

How the market operates: Insurance payments, hidden risks, real efficiency

Despite the difficult conditions, the insurance market is still functioning. Payments are made regularly, but only under the following conditions:

• clear registration of the route and documents,
• an agreed procedure for EWRI payment,
• a separate cargo policy.

One real example is the container ship “SHUI SPIRIT”, where the cargo on board got damaged due to missile strike on the Chornomorsk Fishery Port. The insurance company paid indemnity.

What else to pay attention to:

• duration of coverage in the High Risk Area,
• possibility of withdrawing coverage,
• reinsurance conditions.

Forecast: What is next?

According to forecasts, in the near future, EWRI rates will remain within 0.35–0.40%, with the potential to decrease up to 0.25–0.30% if a ceasefire agreement is reached or if situation in the Black Sea is stabilized.

CONCLUSION

For Ukrainian business, cargo insurance today is not just a formality, but a strategic risk management tool. Military challenges have turned it into an integral part of safe logistics. Those companies that have promptly adapted to new conditions, have agreed on documents, understand recovery mechanisms, and have an action plan in case of emergency situations, i.e. retain a competitive advantage in the global market. Professional legal support and a competent insurance strategy are not an expense, but just an investment in stability.