Letters of credit (L/C) are again a key component in a major expansion of the Unity insurance facility developed by global insurer Marsh McLennan, the Ukrainian government and Lloyd's of London.

Established to enable Ukraine to provide vital food supplies to the world (DC World News, 22 November 2023), the expanded Unity facility now provides affordable war risk insurance for ships carrying all non-military cargo - such as iron ore, steel, and containerised shipping - and underpins Ukraine's wider maritime export ecosystem.

The public-private partnership supports Ukraine's export trade by providing lower war risk premiums.

Extended benefits

Launched in November 2023 to provide affordable war risk insurance for grain shipments and other critical food supplies globally, Unity offers hull and separate protection & indemnity (P&I) war risk insurance at significantly reduced premiums compared to standard market pricing.

The extended facility will provide exporters with lower premiums to ship a wider range of goods through its Black Sea trade routes and deliver major economic benefits to Ukraine.

In addition to grain, Unity now provides cover for Ukraine's other leading export industries including iron ore, steel, electrical equipment, and animal fodder.

L/C arrangements

Standby L/Cs created by the state-owned Ukrainian banks Ukreximbank and Ukrgasbank, each confirmed by Germany's DZ Bank, will continue to provide a first loss compensation fund to shipowners and charterers which is supported by the government of Ukraine.

Underwritten by insurers based at Lloyd's and other London-based insurers, Unity provides up to US$50 million in hull and P&I war risk insurance.

Unity is available to clients of all Lloyd's registered brokers, to provide added support to ongoing humanitarian efforts and alleviate continued pressure on supply chains and global food security.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.