Insurers face losses due to Suez Canal closure

As the global shipping industry heaves a sigh of relief at the re-floating of the ‘Ever Given’ stuck on the Suez Canal, allowing transit of a long line of ships to resume their journeys slowly, the next challenge will be on the insurance aspect of trade losses caused by the blockade, states experts.

1. Balasundaram, Executive Vice-president, Global Insurance Brokers Pvt Ltd, remarks, “The insurance industry is waiting with bated breath at the direction from which claims can arise out of the Canal blockage and of course what could be the enormity of the exposure.”

“There are various areas of claims to possibly come up such as demand for GA (General Average) and salvage guarantee from cargo interests. There could be a claim under the hull and machinery policy or damages against the vessel, and business interruption losses. There could be losses due to perishable cargo or the cancellation of orders, hence the claim demand,” he further added.

Describing it as a “once-in-a-lifetime type of event”, the Canal blockage is estimated to cause losses in billions of dollars for insurers and the loss of trade every day due to the closure is pegged at close to $9 billion, he declared. Once the blockage is removed, it may still take at least a week for all the piled-up vessels to pass through the Canal.

“Some vessels bound for India are among them and it is expected that there could be pressure for a while on the Indian ports on the west coast as many of these vessels may seek berthing together in rapid succession,” he said.