Undaunted

Ukraine supplies 10% of the world’s grain and 40% of the World Food Programme’s wheat supplies, much of which goes to countries in Africa, which is already experiencing food shortages. In 2022 it was clear a looming food crisis was coming; Ukraine was unable to export the 2021 harvest and the 2022 harvest was threatened because all the grain stores and silos were still full. Chris decided something had to be done to help, he explains how.

“I’m an avid follower of business news and regularly listen to or read the news on my morning commute. I had been reading the significant coverage on the importance of Ukraine’s grain exports to the world and the unfolding crisis.

As I walked out of the Lloyd’s building on 18 May 2022, it occurred to me it could be possible to facilitate some form of coverage for Ukrainian food products and grain for exportation, using a dedicated consortium or facility. I emailed my colleague who leads Marine Underwriting at Ascot and the CEO of Ascot, we agreed we should be ready to act. I wanted us to be prepared and I wanted the London market to be the first to come up with a solution. However, much was still unknown - whether there was going to be a security corridor set up, a naval escort or, what it eventually became, an effective ceasefire for commercial vessels exporting grain and food products. Luckily I had support from my colleagues to bring the idea to life.

We considered doing this as a consortium without a broker, but that takes a lot more time. We knew the reinsurers wouldn’t want to be adding to the aggregates in the region, but we saw it as helping to reduce exposure by getting vessels out of Ukraine. Marsh agreed it was an exciting initiative and one that their customers were asking for.

It was important for us to keep costs low and offer a solution that is easy for customers to use. Together we agreed it needed to be a net line facility from the start, which basically meant all underwriters shared a small portion of the risk that would not expose their respective reinsurers. Ultimately, that means the brokers only need one point of contact, we can do the compliance checks and there is no selective pricing, no matter how many shipments a client wants to cover. We wanted everyone to receive the same product with the same terms and conditions, so it was fair to all.

Every risk that was quoted has been bound, so clearly the insurers and the market are comfortable with the pricing.

The Lloyd’s licensing system allowed multiple insurers to come on board quickly. We ended up with 21 carriers under the facility that could support this kind of high-level risk, which we announced at the end of July. So far, in less than 6 months, our work together has led to over 100 ships, carrying more than 2.3 million tonnes of grain, being able to leave Ukraine. It’s a perfect example of how the Lloyd’s market uniquely brings together skilled teams that can mobilise at speed, to facilitate a bold solution in a time of global crisis.

I’m lucky to have the flexibility in my position as Head of Cargo and Innovation to address such challenges from a creative perspective. In 2020, we launched the global health risk facility for Covid-19 vaccines in developing countries with Parsyl, this is a great example of creativity and another example of how Lloyd’s can react to provide solutions. I’m very proud to work in the Lloyd’s market and with marine cargo in particular. We have the ability to keep global trade flowing, providing solutions that really help people.

It’s all about the greater good, it’s not every day you can play a small part to reduce the risk of a global food crisis, it’s a privilege to work in an industry that can respond at times of need. For insurance innovation more broadly you must be supported by a company or capital willing for you to run towards the risk. We’ve got that at Ascot and we’ve certainly got it with Lloyd’s too."