Introduction
In March 2021, the Suez Canal blockage disrupted global supply chains, leading to massive business interruptions across sectors.
A significant proportion of global seaborne trade passes through the canal, and the choking delayed shipment of cargo worth billions of dollars. The impact was felt across sectors such as surgical and medical equipment, semiconductors, plumbing, general warehousing, storage, sports and so on. To add insult to injury, contingent business interruption (CBI) insurance policies failed to cover losses caused by cargo delays as there was no physical damage involved, which means that businesses had to bear the loss themselves. Consequently, many businesses have begun to question the value of buying contingent business interruption insurance.
However, this does not mean that insurers escaped unscathed—businesses have filed lawsuits against the lack of coverage. Additionally, insurers are facing huge litigation costs, reputation risk, and massive claims (related to third-party liabilities), and rising operating expenses in claims processing. Moreover, with businesses now demanding coverage for similar future incidents, insurers are under pressure to address…
