Suez Canal blockade to cause loss of 9 billion dollars per day for insurers

New Delhi: As Suez Canal was blocked by a container ship, reports suggests that insurance industry may affect a loss of 9 billion dollars per day.

According to R. Balasundaram, Executive Vice-president of Global Insurance Brokers the insurance industry is waiting with bated breath at the direction from which claims can arise out of this canal blockage and of course what could be the enormity of the exposure. There are various areas of claims to possibly come up such as demand for GA (General Average) and Salvage guarantee from cargo interests, there could be a claim under the H&M policy or damages against the vessel, business interruption losses, etc. There could be losses due to perishable cargo or the cancellation of orders, hence the claim demand.

He said the likely impact of this incident on India is minimal for now but if the blockage continued for days/weeks, pressure could have mounted for certain industries that depend on Europe and the US for critical raw materials/parts or for those industries whose turnovers are driven by exports to these countries.

"Further, as the blockage is removed, it may still take at least a week for all the piled-up vessels to pass through the canal. Some vessels bound for India are among them and it is expected that there could be pressure for a while on the Indian ports on the west coast as many of these vessels may seek berthing together/in rapid succession," he added.

For India, pressure could mount for certain industries that depend on Europe and the US and it is expected that there could be pressure for a while on the Indian ports on the west coast as many of these vessels may seek berthing together/in rapid succession.

According to various reports, The massive container ship which had blocked the Suez Canal since March 23 has been freed and re-floated.

The Suez Canal, which connects the Mediterranean to the Red Sea, provides the shortest shipping route between Asia and Europe.

The blockage was costing the canal operator $13 million to $14 million in losses per day, according to the head of SCA.

At least 18,840 ships passed through the canal last year.

The Suez Canal provides one of Egypt's main sources of income, alongside tourism and remittances from expatriates.

Revenue from the waterway reached $5.6 billion last year.