News / New cargo insurance products another chance for a 'quick cash grab'

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Forwarders appear less concerned than insurance firms at the present state of cargo coverage, amid warnings that the war in the Persian Gulf has exposed the frailties and fragmented make-up of policies concerning freight.

In an op-ed for The Loadstar, Breeze’s chief insurance officer Patrizia Kern-Ferretti urged a rethink in the way cargo is covered, suggesting it is far more exposed to conflict-related issues than vessels and equipment.

But forwarders have pushed back, telling The Loadstar they believe insurance firms and those offering coverage are pushing the idea of poor-quality cargo coverage so they can “milk” the situation in the Middle East.

One forwarder said they believed “insurance and particularly cargo Insurance was a topic to be classified up there with politics and religion”, describing their “knee-jerk reaction” to news that DP World was providing cargo insurance: that it was “a quick cash grab”.

“I think that with the current global uncertainty, due to the issues that our industry is facing due to the Middle East crisis and conflict, that new cargo insurance offerings are yet another opportunity to milk it,” the forwarder said.

 “There are, and have been, a number of long-term reputable companies, like Lloyds of London, which have offered the very best marine insurance options in the market, and I believe the industry will tend to stay with those they trust.”

Asked about suggestions the insurance market was fragmented, the forwarder acknowledged that a lot of providers had removed war-risk provisions from their standard coverage, but that they felt more comfortable using traditional insurers.

Another forwarder told The Loadstar the state of the market for cargo coverage “remained unchanged”, noting they “don’t see any problems” and that their policies continued to cover war, general damages, and more.

Forwarders The Loadstar spoke to acknowledged that part of their pushback on the issue concerned “a perpetual sense that cargo owners and their logistics partners have been exploited at every opportunity” in the face of every recent crisis.

Throughout the crises in the Red Sea and Strait of Hormuz, forwarders and shippers have expressed anger at surcharges imposed on them, many telling The Loadstar these extra costs brought no added protection.

While there are those who have suggested the present insurance market does not serve cargo coverage well, with the crisis in the Persian Gulf exposing some structural gaps, they too are weighed down by scepticism, believing the market will not improve.

One forwarder said that, with new products, the proof would be in the response to any claims lodged with the provider, “and to get an idea on this front, you first have to find someone who has bought into the product”.

“And then, when the time has come to claim, find out if they have had a smooth, pain-free experience in being paid out, or subjected to hidden small print and not getting the full benefit of the ‘cover’ they have bought into,” they added.