Cargo Insurance in Conflict Zones: Navigating Risks and Limitations

Purpose: The aim of this article is twofold: firstly, to examine the challenges associated with insuring cargo transported through regions affected by armed conflicts; secondly, to explore the spectrum of perils prevalent in conflict zones and analyse the standard provisions of war and strikes risk insurance policies. In doing so, the article will highlight the limitations of such policies and identify potential coverage gaps. Design/Methodology/Approach: To accomplish the objective of the paper, the desk research method was identified as the most effective approach. This analysis relied on secondary data sourced from reputable institutions within the insurance and transportation sectors. Additionally, the study included an examination of internationally established conditions for insuring cargo against risks associated with war and strikes. Findings: The research underscores that armed conflicts markedly amplify the exposure of cargo to risks such as piracy, terrorism, and state-sponsored violence, particularly along critical trade corridors like the Red Sea and the Black Sea. While these perils are excluded under standard Institute Cargo Clauses, they can be insured through specialized provisions, such as e.g. the Institute War Clauses – Cargo. However, these clauses still omit key risks, such as e.g. land-based exposures, creating significant gaps in coverage. Insuring cargo in conflict zones requires tailored insurance solutions, including additional endorsements and war-on-land policies, to account for the unique risks faced in conflict zones. Practical Implications: This article contributes to a better understanding of insurance mechanisms to mitigate the risks of war and strikes in freight transport, which are important for safe and efficient supply chains. Originality/Value: This issue is both current and crucial for cargo insurers, shippers and brokers.