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 involved said.
Ports across the globe are dealing with multiple issues that are disrupting flows of goods, including attacks by Yemen's Houthis on commercial shipping as well as the risk of strikes at terminals in the United States.
"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," Ed Parker, head of special risks at TMK, said.
The new insurance facility, which the companies said was the first of its kind, will provide cover up to a limit of $50 million per incident.
"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," Louise Nevill, CEO of UK Marine at Marsh Specialty, told Reuters.
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 said.
Nevill added that they had received interest already from U.S. West Coast ports looking at potential disruption off Taiwan, as well as 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 - Reporting by Jonathan Saul; Editing by Alex Richardson)