DP World is set to introduce cargo war-risk coverage for businesses engaged in trade within or through the Middle East, following a significant increase in insurance premiums due to ongoing regional conflicts.
This initiative aims to ensure supply chain continuity along vital trade routes, including the Arabian Gulf and Red Sea routes covering West-East and East-West maritime routes (Wam).
The war-risk cover encompasses physical loss or damage arising from war-related incidents such as conflict, civil unrest, and seizure by derelict weapons. All valid claims will be settled without a deductible.
Coverage limits are substantial, offering up to $400M per shipment and $1M for inland movements, along with standalone policies for ocean, air, or land transit and automatic port storage coverage for up to 14 days.
While specific premium costs were not disclosed, DP World indicated that it has negotiated pricing significantly lower than standard war risk premiums. Cargo owners will have access to a unified policy that safeguards goods throughout their entire journey, including in high-risk areas, thereby facilitating trade under critical circumstances.
Recent industry assessments reveal that insurance premiums for political violence in the Gulf have surged dramatically, with costs escalating from approximately $1,000 to $2,200 annually for a $1M policy to between $20,000 and $120,000 in the current climate.
This shift will be a welcome relief for maritime firms and manufacturers although the impact will depend on uptake and any conclusions to the Iran war.
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