Suki Basi: Red Sea crisis creating new exposures for insurers

The attacks on vessels in the Red Sea by Yemen’s Houthi rebels are just the latest in a series of events reshaping risk exposures for marine insurers, according to Russell Group managing director Suki Basi.

In an interview with The Insurer TV, Basi highlighted how the Red Sea disruption had served to channel trade into other avenues such as China’s Belt and Road Initiative.

“Over the past five or six years, global trade has been significantly impacted by a series of events,” Basi said.

“This has highlighted the importance of knowledge of the underlying risk and exposure. This particular situation in the Red Sea – and the re-routing of trade, mostly around the Horn of Africa – gives the industry exposure spots that are new.”

With China already pushing ahead with its Belt and Road Initiative, and a gradual uptick in trade over the road system from Africa into Europe, Basi said there were also wider geopolitical trends which could impact marine insurers.

He added that there were steps carriers could take to better understand exposures. These include being more mindful of the scenarios they are exposed to and knowing what their exposures are when events do take place.

And instead of pulling away from insuring global trade, Basi wants carriers to make better use of the opportunities that changes in the space have created.

One example of these opportunities is the opening of new trade routes through changing weather patterns.

“The loosening of ice has actually opened up new transit systems through the Arctic Ocean and enabled, certainly that part of the world, to ship to Europe in another way,” he said.

Basi said the insurance industry must adapt its products to meet the demand created by changes to global trade routes, while remaining aware of the associated exposures.

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