Blog: Non-damage business interruption comes ashore

Maersk container ship - copyright Maersk

  • Strikes, blockades, terror attacks and natural disasters all give rise to NDBI 
  • Exposure is increasing due to globalisation, the role of tech and political instability 
  • A large part of the forecasted rise in the demand for NDBI coverage is the increased exposure to cyber risk

Non-damage business interruption has long existed in the maritime sector and could come ashore for companies looking to protect themselves, especially from cyber risk, explains David Williams, underwriter at The Strike Club.

There is a growing trend of companies looking at alternative ways to protect their revenue stream from disruption. Non-damage business interruption is a relatively new concept shore side, but the exposure has always existed for owners and operators of seagoing vessels.

NDBI refers to risks and exposures that are not linked to the physical damage of an asset, but still affect the revenue and income of a business. It’s viewed as a form of business interruption insurance, which traditionally has been linked with property and casualty risks.

Businesses of tomorrow face a rising number of new and developing risks that threaten revenue stream as opposed to assets. As a result, NDBI insurance is fast becoming an important part of the risk framework of companies that look to protect themselves from the ‘known unknowns’.

Industrial action, strikes, organised blockades, as well as terrorist attacks and natural disasters, all give rise to NDBI. Any one of these triggers can result in a declining revenue or cash flow, despite not causing damage to the physical assets of the business.

Increased political instability, a more globalised economy and the influence of technology are all cited as reasons this type of exposure is on the rise.

The mobile nature of a ship, combined with the fact it will usually feature at the beginning or end of a local supply chain, means that owners and operators of vessels face a constantly changing and complex set of exposures beyond their control. Multiple parties and multiple pieces of infrastructure are required to work on time for loading or discharge to commence and complete on schedule. If they don’t, delay ensues and operator margins are squeezed.

This particular matrix of risks has long been recognised by the maritime sector – and its solutions are available, such as marine delay insurance. Maritime insurers have been helping ship operators for decades to mitigate their financial exposure to vessel delays beyond their control. NDBI is the core of the insured exposure, protecting owners and operators from risks onshore that affect a port and its infrastructure but also the supply chain further inland, as well as delays arising from political unrest and industrial action.

The Strike Club has noted a rising interest in the cover as depressed freight rates mean that vessel owners hold less commercial bargaining power to refuse certain areas or risk ‘hot spots’. These riskier voyages, coupled with highly leveraged vessel finances, place operators in an unenviable position, adding more pressure to already thin revenue streams.

A large part of the forecast rise in the demand for NDBI coverage is the digitalisation of business and the increased exposure to cyber risk. As more companies becomes reliant on networked IT systems and information sharing platforms, their exposure to NDBI risks like cyber attacks and technology failures increases. The indirect cascading risks associated with a terminal going offline are significant. This type of incident can impact revenue significantly for all types of vessel operator, large or small.

Certainty in an uncertain world remains a key objective for shipowners and shore-based companies alike. Although NDBI is the new terminology, the concept is not novel.

However, the risk environment facing companies today is ever evolving and these types of business disruption risks – and the solutions to manage them – are more relevant than ever.  

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have an Insurance Post account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: