Suez Canal blockade to cause losses in billions of dollars for insurers

New Delhi, March 29 (IANS): With a loss of $ 9 billion per day due to the Suez Canal being blocked by a container ship, global industry is awaiting the enormity of insurance claims.

For India, pressure could mount for certain industries that depend on Europe and the US and it is expected that there could be pressure for a while on the Indian ports on the west coast as many of these vessels may seek berthing together/in rapid succession.

R Balasundaram, Executive Vice-president, Global Insurance Brokers said Suez Canal blockade, a once-in-a-lifetime type of event is estimated to cause losses in billions of dollars for insurers and the loss of trade per day due to the blockage at close to $ 9 billion.

He added that the insurance industry is waiting with bated breath at the direction from which claims can arise out of this canal blockage and of course what could be the enormity of the exposure. There are various areas of claims to possibly come up such as demand for GA (General Average) and Salvage guarantee from cargo interests, there could be a claim under the H&M policy or damages against the vessel, business interruption losses, etc. There could be losses due to perishable cargo or the cancellation of orders, hence the claim demand.

He said the likely impact of this incident on India is minimal for now but if the blockage continued for days/weeks, pressure could have mounted for certain industries that depend on Europe and the US for critical raw materials/parts or for those industries whose turnovers are driven by exports to these countries.

“Further, as the blockage is removed, it may still take at least a week for all the piled-up vessels to pass through the canal. Some vessels bound for India are among them and it is expected that there could be pressure for a while on the Indian ports on the west coast as many of these vessels may seek berthing together/in rapid succession,” he added.