How Shipping Insurance Really Works During a War
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What is the role of insurance in maritime trade and why is it crucial?
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Hello and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.
And I'm Joe Weisenthal.
Joe, you know, I'm slightly obsessed with insurers. Maybe obsessed isn't the right word, but fascinated, appreciative of insurers, because I think there's a tendency to think of them as sort of limiting factors in the world. So, you know, if you can't get insurance in California, you can't build a house. But I also think of them as enablers of certain behaviors, right?
I think that's a really good way to put it. People do a lot of things that they wouldn't otherwise do were they not able to get insurance on it. So yes, it does cut in both directions. So we should appreciate the existence of the existence of insurance. All right. Actually, you know what my daughter actually ex um Your daughter has insurance? She well, she ex asked me to explain insurance the other day. Which I was like, you know, and then suddenly I was like, Oh, I have to Explained general. Wait, first of all,
tell the listeners how old your daughter is. I was
trying to I can't remember the the context exactly what it was. Maybe it was something about fire insurance, et cetera. But I think I I was actually pretty proud of myself. I was basically like there are these risks that happen where, like, say if your house burns down, you could like ruin you financially, but it doesn't make sense to like save all that money in cash and always have that much savings available to be able to rebuild your house and therefore the way You solve it by paying a small amount. I was like pretty like happy. I think she got it.
I'm glad she's planning for home ownership at an early age. Okay, well now is a really good time to think and appreciate insurance because as you know, we are recording this on April eighth. I feel like do I need to say the hour? Maybe I do. Twelve oh six PM on April eighth. It is not entirely clear at the moment what is going on in the Strait of Hormuz. We don't know if ships are being allowed to pass or not, but we do know since the earliest days of this entire conflict happening that one of the issues that's come up is war insurance and maritime insurance in general.
Yeah, and we sort of like touched on it in our very first episode that related to the war, but of course one major reason why ships haven't been moving through is the direct threat of being attacked and sinking. But then another element is the entire insurance element. And then beyond that, like that adds cost to everything. And I it's not, you know, how do you price war insurance? I have no idea. So I have many more questions on this topic.
Yeah, the whole ecosystem of maritime insurance in general, you hear these things thrown around like whole loss protection and liability protection and there's the reinsurers and then there's the normal insurers and then there are insurance clubs. Right. There are all these things. What if an
insurance say you belong to the Soho Club? Me, I belong to an insurance club. Like think about that's
You kind of have the club jacket thing. I'm wearing a jacket today. At the moment. Okay. Well, we do in fact have the perfect guest to talk about all of this. We're going to be speaking with Dorothea Yuanu. She is the chief executive officer of the managers of the American P and I Club. So
Amazing.
You can ask her if you can join.
Can I
join? As well. As well as I need
like one b I need one member to endorse me and another one. That's how it works at these clubs.
All right, well the second member who could potentially endorse you is Steve Okolukian.
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Chapters
7 chapters
1
What is the role of insurance in maritime trade and why is it crucial?
0:00–6:48
2
How do protection‑and‑indemnity (P&I) clubs differ from traditional insurers?
6:48–15:47
3
Why are war risks excluded from standard P&I policies and how are they covered?
15:47–25:59
4
How is the premium for war‑risk insurance calculated and why does tonnage matter?
25:59–33:13
5
What is the International Group of P&I Clubs and how does collective reinsurance work?
33:13–42:07
6
Why did the clubs issue a cancellation notice for war coverage in the Persian Gulf and what does it mean for ship owners?
42:07–49:17
7
How do P&I clubs handle claims, loss prevention, and crew safety during wartime?
49:17–55:15
Speakers
4 identifiedMore from Odd Lots
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