Collins Dictionary recently released the most used words of 2022, with “permacrisis” being voted as the most employed word of the year. “Permacrisis” is defined by Collins as “an extended period of instability and insecurity”.
A run through some of the events of 2022 makes it clear that this year has been nothing short of a “permacrisis”. New strains of the COVID-19 virus, Russia’s invasion of Ukraine, global inflation, a cost-of-living crisis, and for the UK specifically, never-ending political turmoil, with three Prime Ministers in the space of a year, have headlined the news columns. These have been some of the defining features of the last 12 months.
Yet, for marine (re)insurers, 2022 has been a year of significant global disruption, impacting ports across the globe from Felixstowe to Shanghai. A COVID-19 outbreak in Shanghai caused the port city to suffer week-long shutdowns in January, resulting in $4.5 billion a week in lost trade. This was followed by a further shutdown in May, that dealt a $28 billion blow to the clothing and textile industries, according to Russell’s analysis.
Meanwhile, labour strikes in the UK, attributed to workers’ concerns over the rising cost of inflation, sparked industrial action at Felixstowe in August and September, causing losses amounting to £730m and £947m because of the trade disruption, as reported by Russell.
Cargo ships have been impacted, as well as ports. The Felicity ACE Cargo Ship, which caught fire in February, resulted in a $155m economic loss for Volkswagen, Porsche, Audi and Lamborghini, as highlighted by Russell’s analysis.
Therefore, the question on the minds of every Marine (re)insurer and their clients is this: “How can I ensure that my portfolio remains viable during this period of trade disruption?”
The answer is a holistic view of trade that is backward and forward-looking.
Such a holistic view of trade will help Marine (re)insurers to understand current and future exposure, as well as a better understanding of potential connected outcomes. (Re)insurers who successfully navigate this period of disruption – or permacrisis – will be those that deploy forward-looking and more connected data insights to leverage capital.