Global Geopolitics Complicate Marine Cargo Insurance Landscape

Rising Risks in International Trade

PT Asuransi Asei Indonesia has raised concerns about the growing complexity of risks in marine cargo insurance due to escalating global geopolitical tensions. The recent conflict between the United States and Venezuela has significantly impacted international trade routes and risk profiles. According to Dody Achmad Sudiyar Dalimunthe, President Director of Asuransi Asei, these geopolitical dynamics are causing substantial changes in global trade patterns.

Key Challenges in Marine Cargo Insurance

1. Changes in Shipping Routes: The conflict has led to rerouting of ships to avoid high-risk areas, resulting in longer transit times and increased exposure to risks for cargo, particularly high-value or time-sensitive commodities.
2. Increased Logistics Costs: Geopolitical tensions are causing higher freight rates and logistics costs due to supply chain disruptions and uncertainties. This, in turn, is increasing the insured value of goods and the potential claim amounts.
3. Complex Underwriting: The evolving risk landscape is making the underwriting process more complex. Insurers are facing challenges in determining appropriate tariffs, war risk clauses, and reasurance requirements.
4. Additional Risks: Besides war and political risks, there are growing concerns about delay risks, cargo accumulation risks at certain ports, and deterioration risks for commodities like agricultural products and industrial raw materials.

Implications for the Insurance Industry

The current geopolitical situation is creating a more complex risk profile for marine cargo insurance compared to normal periods. Insurers need to adopt a more selective and risk-based underwriting approach to manage these challenges effectively. The industry must balance the need to provide coverage with the necessity of maintaining adequate risk assessment and premium pricing.

Conclusion

The ongoing geopolitical tensions are significantly impacting the marine cargo insurance sector. Insurers must navigate these challenges by enhancing their risk assessment capabilities and adapting their underwriting strategies to the evolving global trade landscape.