Marsh’s Baker: “Unique” Unity facility can serve as template for future public-private partnerships
Marsh McLennan’s $50mn “Unity” facility to cover Ukrainian grain exports can serve as a template for public-private partnerships across other risks and regions, according to Marsh’s global head of marine and cargo Marcus Baker.
Baker told The Insurer TV he believed there were other areas in which public-private partnerships could play a greater role in helping provide insurance solutions, such as war risks, terrorism and political violence.
“I would love to see us do more things like this – it's innovative, it's different and it shows that we can think outside the box,” he said.
Baker revealed discussions had already taken place between the broker and Israeli authorities around whether there was a need for public-private insurance solutions amid the ongoing Middle East conflict.
He highlighted the work Marsh McLennan has undertaken with the Ukrainian government to map missile strikes, creating a data platform which aggregates data received from the police, military, security services, rescue services, transport services and government institutions.
The platform offers granular insight into the frequency and type of attacks by location over time, as well as the type of assets targeted and damage sustained, and Baker said this could be used to facilitate other forms of coverage in the country such as travel insurance.
“It might sound trite, but it costs between £1,700 and £2,000 a day to travel to Ukraine, and that's not cheap. It's probably putting people off going there, including those who might want to invest money into Ukraine.”
Building for the future
Backed by the Ukraine Ministry of the Economy, Unity will provide up to $50mn in hull and separate protection and indemnity war risk insurance, underwritten by Lloyd’s insurers.
Ukreximbank (the State Export-Import Bank of Ukraine) and state-owned Ukrgasbank will provide standby letters of credit, each confirmed by German commercial bank DZ Bank, to support the facility.
Baker said the “unique” component of the facility was that it had been created by a country effectively at war, working together with Western financial institutions.
“It is probably something that people would have felt uncomfortable with, to a certain extent, before the hostilities. This is building for the future for them,” he said.
Marsh McLennan – including Marsh, its consulting arm Oliver Wyman and reinsurance intermediary Guy Carpenter – had previously formed the “AsOne” facility under the Black Sea Grain Initiative (BSGI) in July 2022.
Russia’s withdrawal from the BSGI in July this year means Ukrainian grain has since been stockpiling in warehouses. The launch of Unity should now enable this grain to reach those countries dependent on Ukrainian exports across Africa, Asia and Europe, while also providing much-needed foreign currency to the Ukrainian economy.
“At MMC we feel hugely pleased to be associated with this positive humanitarian impact,” Baker said. And he highlighted the industry support for the project has continued, with Ascot, the lead underwriter of the AsOne facility, continuing to lead the new Unity facility.
“As an industry, we don’t big ourselves up that much, but insurance, in terms of its ability to be a force for good and enabler of global trade, is just incredible. This has absolutely highlighted that – the whole industry should feel pleased and proud about what we have been able to do.”