Moodys assesses insurance risks supply chains are facing today

When the Dali container ship slammed into the Francis Scott Key Bridge in Baltimore, initial thoughts turned to any loss of human life. But as we have moved farther away from the March incident, the monetary cost is starting to add up. It is estimated that the insured losses for the collapse could be up to $4 billion.

In the Red Sea, Iran-backed Houthi rebels have been attacking shipping in response to Israel’s war on Hamas. In January, the cost to insure a ship moving through the region jumped from 0.7% of the ship’s value to more than 1% in a week’s time, with the expectation the rates would move higher.

“Rates are increasing which is reflective of the significant and opaque risk exposure within the Red Sea,” Munro Anderson, head of operations at Vessel Protect, told Reuters at the time.

Supply chains are vulnerable to a series of possible disruptions, from hurricanes and other severe weather events to vehicle accidents and even war. To cover possible losses, it takes an insurance industry ready and willing to accept these risks. Increasingly, it is supply chain industry stakeholders that are paying for these risks.

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