Marine insurance is essential for businesses involved in global trade, protecting them against a variety of risks. However, the shifting complexities of the marine environment have brought new challenges, as revealed in Aon’s 2024 Client Trends Report.
The report emphasizes that the modern supply chain is increasingly interconnected, making it more susceptible to diverse disruptions. Various factors like geopolitical instability, inflation, climate change, currency fluctuations, and issues related to workforce availability compound the vulnerabilities businesses face. Specifically, risks associated with suppliers — including political threats, terrorism, corruption, and weak regulatory controls — are becoming critical considerations for decision-makers.
Geopolitical risks pose significant challenges, especially for businesses reliant on supply chains transiting through politically unstable regions. A notable observation is the increase in global trade restrictions, which rose from about 650 in 2017 to over 3,000 in 2023, creating further complications for global commerce.
Aon’s analysis identifies several key trends in marine insurance claims:
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Damaged Goods: Poor cargo handling, inadequate storage, and improper packaging remain the leading causes of claims. The intricate logistics involved in maritime transportation expose goods to risks such as rough handling and unsuitable storage, leading to significant financial losses.
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Theft and Hijacking: The high value of goods being transported, especially along remote routes, has made them attractive targets for criminals. High-value theft claims, often linked to organized crime, disrupt supply chains and have broader economic implications.
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Weather-related Claims: Increasingly severe weather events, attributed to climate change, pose threats to maritime transport. Storms can damage vessels and cargo, and flooding can result in total loss of goods stored in ports or warehouses.
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Fires on Container Vessels: Modern container ships are at risk due to their size, the presence of hazardous materials, and inadequate fire suppression systems. The associated costs for dealing with fire incidents — from salvage operations to environmental cleanup — can be substantial.
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Piracy: While traditional piracy focused on cargo theft, modern pirates now often hold ships, crews, and cargo hostage for ransom. This not only affects crew safety but also disrupts global trade routes, leading to financial losses.
The report also highlights that many of the top risks identified by business leaders, such as business interruption, economic downturns, and supply chain failures, have clear implications for the marine industry. Though some of these risks can be insured, others cannot, underscoring the need for organizations to adopt proactive risk management approaches.
In conclusion, the evolving risks faced by the maritime industry require businesses to navigate a delicate balance as global trade continues to grow. The role of marine insurance in managing these risks is crucial. By staying updated on emerging trends, businesses can better prepare for the uncertainties of maritime transport and safeguard their assets more effectively.
