EFFECTS OF CORONAVIRUS ON THE SHIPPING AND INSURANCE INDUSTRY OF PAKISTAN.

Byline: AHSAN NISAR

The coronavirus has presently affected more than 135,000 persons worldwide. This fast widespread of the virus impacts several business sectors including that of insurance. The World Health Organization declared pandemic won't be affecting life insurance in 2020 and as per Moody's agency estimates, the impact of the pandemic on global reinsurers will be limited, i.e. the consequences will only be significant only at very high levels of gravity. For property and casualty insurance, the impact of coronavirus will be minimal since standard insurance policies do not cover communicable diseases. However, insurers covering the cancellation of high magnitude events e.g. the Olympic Games are more likely to be affected. With regard to the coronavirus crisis, it is on the financial level that the global insurance market will be affected. On another level, an economic slowdown is already predicted by the Organization of Economic Cooperation and Development (OECD) while growth forecasts for 2020 are down by 17%, from

2.9% to 2.4% worldwide.

The shipping industry is likely to be impacted in a number of ways: not only through disruption to voyages to and from China, but also from delays in other countries as a result of quarantine and port checks due to cases, or suspected cases, of the coronavirus amongst crew and passengers on board vessels. Delivery of cargo may be delayed, or cargo may need to be discharged at alternative or interim ports, with expensive consequences and significant logistical and insurance implications. The construction of newbuilding vessels and scheduled ship repairs and upgrades are being delayed as a result of the impact of outbreak on the Chinese workforce, which could adversely affect operating schedules. There have already been press reports that Chinese energy companies may be considering rejecting scheduled LNG cargoes claiming force majeure as national demand weakens.

As well as investigating the contractual implications, effective work health and safety systems and strategies for workers, sites and the wider community should be put in place to preserve business interests and to ensure the safety of workers while plans for business continuity should also be implemented to allow for the recovery of operations if required. These plans will need to be developed globally, particularly in the maritime industry, where strategies around the safety of crew and passengers aboard vessels and the potential impact...