In 2008, those who would never normally criticise banks got the go-ahead to start verbalising at least a bit of negativity towards them, in one of the few bright developments of current times. Unfortunately, though, another part of the financial sector, whose fingers are in almost as many pies as the bankers’, managed to avoid having their reputation dented. I refer to the insurance business.
Could this be about to change? According to Lloyd’s List nearly all of the world’s largest “box ships” (container vessels) are deployed on the Asia-Europe trade that goes through the Suez canal, and switching to travelling around South Africa would add about a week to the journey between Shanghai and Rotterdam. “The cost of delays is increasing by the day, particularly in the container sector where supply chains are already strained.” So much for “just in time” production! “For the oil trades, brokers are now predicting significant diversions to begin imminently.”
Note that unlike most of the British media, Lloyd’s List is not staffed by idiot journalists who when they’re not rubber-stamping government press releases are repeating whatever bilge they find on websites such as Twitter or Instagram.
Edit: the number of ships stacking up at the ends of the Canal has reached 230. According to Lloyd’s List this morning, the majority do not have delay insurance. Shipowners are said to be enjoying this, because they are still charging operators for the use of the ships even though the ships are stationary. The operators won’t be enjoying it, given that they have no clear view as to when (or if) the Canal will reopen. I doubt insurers are enjoying it much either. Lloyd’s List plays a role in maintaining the image of the insurance sector, especially marine insurance, and the publication’s focus on the vessels that are without delay insurance should be interpreted with that in mind. If a majority of vessels are without that kind of cover, then a minority of them must have it. Payouts will be claimed. How big a hit is this for insurers, I wonder? In practice it will probably be insurers who decide whether and when to re-route ships around the Cape, because no insurer pays out on losses caused by a policyholder’s lack of effort to mitigate. And given that the peculiar movements of the Ever Given in the Red Sea obviously weren’t caused by an unusual wind, who knows what other maritime “events” may be lurking around the corner?