In response to growing risks in the global shipping industry, Marsh, a leading broker, and Tokio Marine Kiln (TMK), a Lloyd’s underwriter, have teamed up to launch a groundbreaking business interruption insurance facility for ports. This new solution aims to mitigate the financial fallout from rising geopolitical tensions and disruptions to trade routes.
As ports across the globe contend with increasing threats, such as recent attacks on commercial vessels in the Red Sea and the looming risk of strikes at major U.S. terminals, the need for enhanced protection has become clear. Ed Parker, head of special risks at TMK, emphasized the urgency, saying, “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.”
The insurance facility, the first of its kind, offers coverage up to $50 million per incident. This innovative solution does not restrict coverage to specific geographic areas, making it highly adaptable to various risks worldwide. Louise Nevill, CEO of UK Marine at Marsh Specialty, noted that U.S. ports, particularly on the West Coast, are already showing interest due to concerns about potential trade disruptions related to Taiwan. Similarly, Middle Eastern ports are seeking coverage in light of ongoing geopolitical instability.
Standard ports and terminals policies typically fall short when it comes to addressing the full spectrum of these emerging risks. As Nevill explained, “The standard ports and terminals policies would not respond to these incidents as there was no physical damage or berth blockage, yet they were suffering significant losses of revenue.”
This facility aims to bridge that gap, addressing not only physical threats but also the less obvious revenue losses caused by trade disruption. Ports worldwide are recognizing the importance of such coverage, as global tensions continue to mount.
With ports facing an array of risks from conflict zones to potential trade wars, this new insurance product represents a much-needed safeguard for the maritime industry. As global shipping routes become increasingly volatile, Marsh and TMK’s innovative coverage could prove to be a critical lifeline for ports looking to mitigate the financial impact of trade disruptions.