The conflict in the Middle East is continuing to produce significant risks across maritime trade and global supply chains.
According to a statement by Gallagher Bassett company, W K Webster (WKW), these risks include issues such as damage to maritime transport, ports and terminals, as well as interruptions to supply routes by air, land, or sea. These incidents also create a broad range of commercial impacts, posing significant challenges for insureds and the broader insurance industry.
The complexity of these claims is also continuing to increase. Vessels in the region have been hit by explosions and fire damage, and assets sent to assist, have also been targeted by military strikes. As a result, the firm noted that claims are likely to involve hull, P&I and cargo insurance.
“Expect delays to cargo both in transit and awaiting shipment as vessel owners alter trade routes to avoid high-risk areas. We are likely to see additional freight charges and vessels invoking the right to deviate or deploying force majeure clauses,” said WKW COO Michael Hird.
“This means increased costs for cargo movers and the potential for shipments landing at unintended ports with cargo then needing to be on-carried to final destinations.”
Mr Hird also said, “We will see more frequent losses for time-sensitive cargoes, production downtime, breakdowns in supply contracts, and stock accumulation or shortages.”
War risk insurance policies have been subject to widespread cancellations, and carriers are reevaluating their willingness to accept transits through conflict-affected regions with elevated crew safety risks. Though war risk insurance remains accessible, adjustments to terms and dramatic increases to rates have reduced or eliminated voyage margins.
In such a high-risk, high-cost business environment, effective claims management becomes especially vital, WKW CEO Anthony Smith added. He said, “Whilst hostilities continue to escalate, we will continue to see impacts widening and losses increasing.”