Two catastrophes in the first quarter of 2010, namely the terrible earthquakes in Haiti and Chile, have been a grim start for the ports sector, as well as on the broader humanitarian scale.
Cranes, quays, warehousing and containers were damaged in Port-au-Prince, while in Chile the central port of Valparaiso, the fruit exporting port of San Antonio, and fishing port of Talcahuano were among those where operations were disrupted.
The quakes and the aftershocks, hampering removal of debris and clear-up, will see many of the leading London insurers in the sector face claims - in the case of Chile from an area that in general had a record of very few claims over the last quarter of a century.
There is no doubt that Chile had been an attractive arena to write risks in recent times, especially as its management and systems were seen as based on approved West European practice. Some of the exposures were presented to leading insurers and consortia as “a package".
Some underwriters may be having second thoughts about writing further business there pending a review of this and other parts of what they classify as “cat areas", regions vulnerable to seismic activity. Indeed, the west coast of South America has been no stranger to climatic and geological problems, as illustrated by earlier tsunami losses along the coast of Ecuador and Peru.
The potential severity of claims will bring catastrophe exposed countries under the microscope from the point of view of loss aggregation, deductibles and premium, says one of the leading specialist brokers, Julien Hubbard of Tysers. Clients in regions without such exposure should be unaffected.
The onus in Chile is on the property policies of port and terminal operators, as force majeure can be cited to avoid liability claims when the problems arise from a quake, subject to any arguments there might be about alleged negligence. There may well be questions about responsibility for damage to containers, for instance, while in the care of the port operator. Whatever the fine detail, the tragedies ought to impel ports in the planet’s danger zones – and there are some huge installations in North America and Japan, for instance - to take a new look at whether they have adequate cover in these geologically turbulent times.
