1. What are the challenges faced by companies that are affected by the situation in the Middle East?
"For all those present, only one thing is important: the safety of your employees who work in the Middle East, whether they are stuck on ships or, for example, in ports where they carry out dredging work. Then President Trump can call on countries to help ensure safe passage through the Strait of Hormuz. But if you then know that Iran is designating all these ships as legitimate targets, then you are not going to risk that. For shipowners, the safety of the crew is paramount: if they want to go home, they will be taken care of. Many employees have now been repatriated by the travel industry and the Ministry of Defence, as far as possible. The experience with repatriation during the corona pandemic helped enormously."
2. Recently in the press it was reported that Trump has promised insurance coverage of up to 20 billion for sailing through the Strait of Hormuz. What do you think of that? Are you planning to do this too?
"I continue to emphasise that for Dutch insurers, the safety of the crew is the most important thing. Offering insurance is not the means for this because your safety is not guaranteed. Fortunately, the final word on this and the choice of what to do is up to the captain and crew. At the same time, we fear the consequences. If this goes on any longer, the entire export will come to a standstill: not only by sea, but also by air. In addition to the fact that energy prices are rising enormously and everything threatens to become unaffordable, insurance premiums for seagoing vessels in the Middle East have risen enormously due to the risk of war. Sailing areas for seagoing vessels that are not located in that region and are moored there have been adjusted. The coverage for sea and air transports has been adjusted by insurers based on their own policy. Companies that are active in the Middle East are facing a pressing problem, they often have nowhere to go, literally and figuratively, at the moment."
3. Why do insurers react so differently to whether or not to provide coverage, increased premiums, etc.?
"Insurers are not allowed to consult with each other because we are competing with each other. As a result, there are different insurances with different conditions that customers can choose from, under the guidance of an insurance broker. In this way, customers benefit from better prices and more freedom of choice. As a result, insurers, who together cover the same risk on one policy, come up with different proposals. This happens especially in the case of large and complex risks. By dividing the risk among themselves, it is spread and the customer can still be properly insured. It is then up to the insurance broker to guide this process as well as possible. He negotiates conditions and premiums with insurers on behalf of the insured and looks at what is possible to arrive at a uniform solution and/or adjustment."
4. Why are companies now paying extra for war cover? Can they still insure current sea hull insurance or cargo insurance and why do insurers now make a difference between the coverage for shipments to the Middle East when it comes to container and bulk transport?
"In general, the premium or coverage can change if the risk of war in an area increases. The basic insurance already covers a lot, but in the event of additional danger, insurers sometimes ask for an extra premium surcharge or adjustment of the coverage area or policy conditions. The insurer cancels the coverage for war risk with a period of seven days; this is so-called 'Notice of Cancellation'. Renewing an insurance policy is not self-evident in such situations and goes through the broker. The broker plays an important role as a link between the customer and the insurer(s). Especially in the event of increased risks, the broker helps to find a solution together with insurers, for example by arranging a temporary extension or adapted coverage.
In the case of goods, we see that container transport is more often insured. Insured amounts are lower per container, the insured interest is often only part of the cargo, it may concern relief goods that still have to be transported to that region. The transport of such a cargo will then continue, to a limited extent. While bulk transport has higher values and additional risks (for example, how to deal with cargoes such as oil or LNG, delays and logistical problems). That is why insurers are reluctant there."
5. What do you think should be done?
"It would help enormously if we as transport insurers were allowed to consult with each other. Not to discuss premiums or policy conditions, but mainly to be able to share information about the situation on the spot and to determine together what the best feasible approach is for the customer. For example, also on the question of how to deal with cargoes, which are now increasingly unloaded in 'safe' countries such as India by ships that want to leave the dangerous area. Together with the insurers, brokers, our customers, and insurance experts involved, we need to form a good picture of what is coming our way and how we can strengthen each other in these uncertain times. I hope that the Middle East Taskforce that VNO-NCW and MKB-Nederland has started with the ministries, and of which the Dutch Association of Insurers is also a part, can also help with that."