Most Ships Stuck In The Suez Canal Aren’t Insured For The Disruption
More than 320 ships are caught up in the Suez Canal crisis. Unfortunately, many of them aren’t insured for this sort of situation.
With Evergreen’s 200,000-tonne ship Ever Given blocking the way, hundreds of vessels are either stuck or travelling round Africa – hugely extending their journeys – in order to reach their destination.
Experts earlier estimated the container ship is costing the global economy $400 million for every hour it’s stuck. Soon, these delays could come home to roost, forcing companies to incur massive losses if they’re not covered.
According to new analysis by the Lloyds List journal, the majority of the vessels may not be able to ‘reclaim potentially sizeable out-of-pocket expenses’ as only a small amount actually have suitable delay cover as part of their policies. It’s estimated that 90% may not be covered.
William Robinson, managing director of the strike and delay class at the Standard Club, explained, ‘We are starting to build a picture of the number of ships that are delayed, and the number of ships we insure that are delayed.’
He added, ‘We feel this is a valuable product. This kind of incident shows why it is valuable, even for those kinds of incidents people plan for but hope will never happen.’
Published by David Osler, it notes that the problem isn’t necessarily not having the cover at all – it’s the excess/retention period, which could be at least seven days before it’s insured, if not more.
For example, Nordic Marine Insurance offers loss of hire cover that can pay out on delays. However, it’s generally only after an excess period of 14 days, which are the ‘most painful’ according to Claudio Blancardi, the underwriting and marketing director of the firm.
Unfortunately, take-up of such policies is said to be low, given how unprecedented the Suez Canal situation is. ‘The essence of the cover is financial indemnity for disruption that causes delay to the ship. The range of perils can be anything from a port strike to an incident like this one, or a medical emergency,’ Robinson added.
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