Hormuz Crisis increasing maritime claim complexity
Recent conflict in the Middle East is producing significant risks across maritime trade and global supply chains, according to Gallagher Bassett Company W K Webster (WKW).
These risks include issues such as damage to maritime transport, ports and terminals, and 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 continuing to increase, with WKW handling cargo claims from vessels impacted by recent events near the Strait of Hormuz, where Iran has been attacking ships due to the ongoing attacks against the country by the US and Israel. Vessels in the region have seen explosion and fire damage, and assets sent to assist have also been targeted by military strikes. Claims are likely to involve Hull, P&I, and Cargo insurance.
Michael Hird, chief operating officer at WKW, said: “Expect delays to cargo both in transit and awaiting shipment as vessel owners alter trade routes to avoid high-risk areas. We’re likely to see additional freight charges and vessels invoking the right to deviate or deploying force majeure clauses.”
“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. We will see more frequent losses for time sensitive cargoes, production downtime, breakdowns in supply contracts, and stock accumulation or shortages.”
War risk insurances 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, particularly in the London market, adjustments to terms and dramatic increases to rates have reduced or eliminated voyage margins.
In a high-risk, high-cost business environment, effective claims management becomes especially vital, says WKW chief executive Anthony Smith. “We are prepared for challenges in deploying surveyors or other experts to certain claims locations or emergency situations. Our global network of local agents ensures that we can respond to and investigate claims thoroughly as they arise,” said Smith.
“Whilst hostilities continue to escalate, we will continue to see impacts widening and losses increasing. WKW will continue to meet the needs of insureds – providing access to immediate, high-quality claims service.”
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