BROKER Marsh and Lloyd’s underwriter Tokio Marine Kiln (TMK) have set up business interruption insurance for ports to provide cover against growing trade disruption risks such as threats to shipping in the Red Sea, executives said.
Ports acround the world are dealing with multiple issues that are disrupting the flows of goods, such as attacks by Yemen’s Houthis on commercial shipping, as well as the risk of strikes at terminals in the US.
“Recent geopolitical turmoil has exposed a clear gap in the standard cover available to ports and other cargo facilities. The threat posed by conflict has rendered many established routes impassable,”said Ed Parker, head of special risks at TMK.
The new insurance facility, which the companies said was the first of its kind, will provide cover up to a limit of US$50 million an incident.
“This facility has no geographical limit as to where the disruption event could take place,” said Louise Nevill, chief executive officer of UK marine at Marsh Specialty.
She added: “For example, ports in the US are concerned with trade disruption losses if China invades or blockades Taiwan, or a port in Singapore may have concerns if the Suez Canal was blocked for a period of time.”
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Nevill said the gap in cover for these risks was assessed after companies suffered losses from the Red Sea attacks.
“The standard ports and terminals policies would not respond to these incidents as there was no physical damage or indeed berth blockage, yet they were suffering significant losses of revenue,” she added.
Nevill noted that they had already received interest from US West Coast ports looking at potential disruptions off Taiwan, as well as from ports in the Middle East due to geopolitical risks.
“In the last few years, we have seen significant disruption events occurring, whether it is war in Ukraine, the Ever Given (container ship) blocking Suez, increased hurricanes and typhoons and of course a worldwide pandemic,” she said.
“These ‘once in a lifetime’ events are occurring on a regular basis.” REUTERS
