Gallagher Re and Oxford University’s Program for Sustainable Infrastructure Systems (OPSIS) have announced a research collaboration to help re/insurers understand critical chokepoints in the global supply chain.

With 80% of the world’s trade conducted through global shipping lanes and ports, the geopolitical landscape has presented challenges for the re/insurance industry. The post-COVID-19 recovery saw significant supply chain disruptions, followed by geopolitical conflicts affecting trade in both the Black Sea and Red Sea.

According to the reinsurance broker, the OPSIS research will examine the impacts of disruptions on global supply chains and assist re/insurers by creating realistic disaster scenarios.

Dr Iain Willis, director of the Gallagher Research Centre (GRC), stated that the research would help determine whether the causes are geopolitical, environmental, or related to systemic risks like the global pandemic.

“It is increasingly important to be able to model the knock-on effects of these disruptions, given their capacity to impact multiple re/insurance lines,” Willis said.

Despite the overall strength of the global supply chain, chokepoints can cause re-routed vessels to travel longer distances, consume additional fuel, and pass through areas with unique challenges such as extreme weather conditions or increased vessel accumulation in spillover ports.

Understanding marine chokepoints is fundamental to assessing property contingent business interruption (CBI) risk. Dr Willis noted recent instances where blockages led to delayed delivery of construction and automobile parts, spoiled cargo, and shortages on retailer shelves.

Professor Jim Hall also expressed enthusiasm about the partnership, highlighting that it would deepen the understanding of threats to shipping and the implications for global maritime trade.

“Understanding and modelling these chokepoints will help us to ensure more resilient global systems,” Hall said.

Nick Croxford, head of marine and energy at Gallagher Re, acknowledged the challenges facing the maritime insurance industry.

“Getting under the bonnet and exploring both the challenges and potential solutions on the horizon is crucial to the industry, which is why we are so thrilled to be announcing this partnership today,” Croxford said.

The collaboration will include the sponsorship of a Gallagher Fellowship, supporting a researcher working with scientists at Oxford University’s Environmental Change Institute (ECI). This researcher will be affiliated with both the ECI and the GRC, further enhancing the partnership’s research capabilities.

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