Saudi Arabia creates war risk insurance pool for cargo and ships
In Saudi Arabia, the Cabinet approved the creation of a national war risk insurance pool for cargo and ships. The mechanism is intended to strengthen the domestic insurance market’s capacity and support the continuity of trade and logistics amid geopolitical risks to maritime transport, Asharq Al-Awsat reports.
The new mechanism will bring together the public and private sectors under the supervision of the Saudi Insurance Authority. It is intended to reduce the impact of instability and rising reinsurance costs in global markets, particularly during periods of sharp increases in insurance premiums or a narrowing of insurance coverage for certain regions.
How the pool will operate
The Insurance Authority selected the Saudi Reinsurance Company, Saudi Re, to establish and organize the pool’s operations. The company will manage its technical operations and reinsurance arrangements, while insurance coverage will be provided by insurers participating in the mechanism in accordance with the approved terms.
The pool will cover cargo transported by land, sea and air, as well as hull insurance for ships against specified risks and damage. In addition, it provides charterers’ liability coverage, as well as protection and indemnity insurance coverage for participants in transport and trade operations.
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The list of potential coverage recipients includes importers and exporters, shipowners and operators, shipping, freight and maritime transport companies, businesses in logistics and supply chains, as well as Saudi insurers participating in the pool.
Support for trade
Saudi Finance Minister Mohammed Al-Jadaan said that the pool will become a specialized national mechanism to support trade and supply chains in a public-private partnership format. According to him, the initiative will expand the local insurance market’s capacity to provide the necessary coverage.
Logistics specialists surveyed by the publication noted that growing shipping risks in the Red Sea and Gulf region have prompted some insurers to tighten insurance terms for ships linked to the region. In their view, more stable war risk coverage will give transport companies, importers and exporters greater certainty when planning voyages, concluding contracts and setting prices.
The Insurance Authority identified improving the market’s preparedness for marine insurance risks, supporting cargo flows, limiting the impact of rising reinsurance costs and strengthening the country’s position as a logistics hub among the pool’s main goals.
