Marsh, a global professional services firm offering risk management and insurance solutions, and Tokio Marine Kiln (TMK), a specialist Lloyd’s underwriter, have teamed up to create a business interruption insurance facility.
This new facility aims to address growing trade disruption risks at ports, including geopolitical threats, according to Reuters.
The partnership comes as ports worldwide are grappling with various issues affecting the flow of goods, such as threats to shipping routes in the Red Sea due to attacks by Yemen’s Houthis, as well as the risk of strikes at U.S. terminals.
These increasing risks have highlighted gaps in traditional insurance coverage for port operations.
The new business interruption insurance facility is the first of its kind, providing coverage of up to $50m per incident. It is designed to protect ports from potential revenue losses due to trade disruptions, even if physical damage or berth blockages are not present.
The facility has no geographical restrictions, meaning it can cover ports across the globe. This includes concerns such as a potential blockade of Taiwan or disruptions to shipping through the Suez Canal.
Louise Nevill, CEO of UK Marine at Marsh Specialty, highlighted the increasing need for this facility, noting that standard port and terminal policies often do not cover such events.
She remarked, “This facility has no geographical limit as to where the disruption event could take place. For example, ports in the U.S. are concerned with trade disruption losses if China invades/blockades Taiwan or a port in Singapore may have concerns if the Suez Canal was blocked for a period of time.
“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.”
Further supporting the need for this new insurance product, Nevill stated that ports have suffered significant losses despite the absence of physical damage, particularly from recent Red Sea attacks. She added, “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. These ‘once in a lifetime’ events are occurring on a regular basis.”
Ed Parker, head of special risks at TMK, emphasised the gap in standard insurance cover exposed by geopolitical turmoil, stating, “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.”
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