Insurance withdrawal and insurance provider analysis as a counter trafficking tool.
International shipping depends upon credible insurance coverage to ensure access to ports and routes. Port and state authorities have the right to inspect insurance documentation and policies to satisfy concerns that in the event of an accident, the ship owner or operator will be able to meet claims for compensation.
The principle role of credible insurance and its potential to be withdrawn constitutes an emerging tool by which states, multilateral organizations and the private sector may stem destabilizing commodity transfers such as weapons and oil to or from countries subject to European Union (EU) and United Nations (UN) embargoes.
Established, credible insurance providers are often unaware of the sanctioned or illicit nature of the cargo that the vessel they are insuring is transporting. Early warning and information-sharing between the private or non-governmental sector, port and national authorities is thus key to the development of insurance cancellation as a means to disrupt destabilizing or wholly illicit commodity flows via sea.
Insurance provider analysis as a counter trafficking tool
Maritime transfers of military equipment and oil to or from states under EU or UN embargoes depend upon the transporting vessels being adequately insured. Without credible insurance, ship operators risk their vessels denied entry to ports or territorial waters, and having their legal commercial activities undermined.
While most vessels are covered by established, credible insurers which pool risk and are backed by substantial reinsurance, port and national authorities are entitled to scrutinize vessel insurance providers and deny ships access to ports and territorial waters should the insurance provider be assessed as lacking the required assets to meet potential claims.
Maritime insurance as a counter trafficking tool is one area of study and investigative field research undertaken by SIPRI’s Countering Illicit Trafficking – Mechanism Assessment Projects (CIT-MAP).