III an expert in marine insurance

AJAY SADANA, III SINGAPORE

An ill-timed sandstorm and high winds threw the global spotlight on a large container ship and an important maritime passageway in March.

In an unprecedented event, the cargo vessel Evergiven ran aground in the Suez Canal, blocking a key trade route for six days and holding up global trade valued at over US$9 billion a day.

The incident drew attention to the importance of the Suez Canal, through which 12 per cent of global trade passes. It connects the Mediterranean to the Red Sea and provides the shortest sea link between Asia and Europe.

Smooth passage through the canal helps global companies save time, fuel, transit expenses and multiply trade. Overall, the global economy grows, as the ultimate price of a commodity depends on the cost incurred in manufacturing and logistics.

The successful movement of a cargo vessel through such a vital maritime passageway depends on proper and skilled navigation.

When things go wrong, the owner of the vessel knocks on the door of an insurance company.

Any unfortunate event which is beyond the control of the insured is insurable. But in this instance the question is where did the loss occur, apart from some minor damage to the ship's hull?

When the vessel got grounded, some sections of the hull could have got damaged. The subsequent salvage operations incurs additional costs. The delay in delivery of the cargo will also attract a penalty.

The cargo could also include perishable items.

Evergiven blocking the canal caused a domino effect, with several other vessels unable to cross the canal and having to either wait for the route to clear or take an alternate, longer route to their destination.

The owners of these vessels will also have to bear losses for the delay, including additional fuel expenses and damage to perishable commodities.

The transit schedule and bookings to cross the Suez Canal also got upset by at least a month.

The incident, termed a roulette wheel scenario for insurers, will mean millions of dollars of losses to the Japanese company which owns Evergiven, the owners of other vessels which got affected and to the marine industry as a whole.

Fortunately, the insurance industry safeguards and cushions the monetary impact to the insured within the purview of the contract.

India International Insurance Singapore (III) has been doing marine insurance since its inception in 1987 and is licensed to do business globally.

The Singapore-based insurer has dealt with and underwritten different types of marine risk, whether it is Vessel Insurance, commonly known as Marine Hull Insurance, Marine Cargo Insurance or Energy Insurance.

Energy Insurance is done at Exploration stage, Production stage or Construction projects, which are carried out offshore. This is a niche segment of insurance which requires years of proficiency and technical competence.

Although the marine insurance premium levels are nominal compared to the liability undertaken, these unfortunate but revelatory losses compel the industry to review the prevailing market conditions and initiate price corrections.

Marine insurance is a loss-prone insurance segment, but the strength of the insurer is to stay in the industry during both profitable and loss-making years.

III Singapore is a non-life insurer. It also deals with other lines of insurance, such as motor, personal accident, travel, home, property, liability, engineering and maid bond.

III believes in providing the best insurance solutions, studded with technical expertise and years of diverse experience. More details about India International Insurance Singapore's products can be found at www.iii.com.sg

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