A new research collaboration between reinsurance experts Gallagher Re and ECI's Oxford Programme for Sustainable Infrastructure Systems (OPSIS) has been established to help (re)insurers understand critical chokepoints in the global supply chain.   

With insurance risk managers highlighting supply chain risk as one of their primary concerns, the programme will model both the origins of supply chain pressures and their relative impacts on (re)insurers. Gallagher Research Centre (GRC) Director, Dr Iain Willis explained: 

This research by the ECI at the University of Oxford will be vital in helping us establish whether those causes are geopolitical, environmental or related to systemic risks like the global pandemic.


It is increasingly important to be able to model the knock-on effects of these disruptions, given their capacity to impact multiple (re)insurance lines.” 

With 80% of the world’s trade being conducted through global shipping lanes and ports, the geopolitical landscape has been challenging for the (re)insurance industry for a number of years: the post COVID-19 recovery saw major supply chain disruptions, rapidly followed by geopolitical conflicts impacting trade in both the Black Sea and Red Sea. Most recently, rising tensions in the Red Sea have led to a 37% and 34% decline in weekly cargo and tanker ships passing through the Suez Canal.

The OPSIS research will examine the impacts of such disruptions on global supply chains as well as helping (re)insurers through the creation of realistic disaster scenarios for supply chain. 

While overall global supply chain remains strong, choke points can lead to re-routed vessels travelling longer distances, requiring additional fuel and requiring them to pass through areas of the world that present other, unique challenges – such as experiencing more extreme weather or leading to larger accumulations of vessels in spillover ports.

Insight beyond the marine insurance market, into property risk, will also come to light, because modelling marine chokepoints is fundamental to understanding property contingent business interruption (CBI) risk. “We’ve seen instances recently where these blockages have led to delayed delivery of construction and automobile parts, spoiled cargo, and shortages on retailer shelves,” added Dr Willis.      

The partnership includes the sponsorship of a Gallagher Fellowship, supporting a researcher working with scientists at the Environmental Change Institute (ECI) at Oxford University, affiliated to both the ECI and the Gallagher Research Centre. The ECI has recently been developing new modelling solutions to quantify systemic risks to maritime trade and transport, particularly those related to climate extremes.

The new Fellow will work alongside Professor Jim Hall, the OPSIS programme lead and Professor of Climate and Environmental Risk at the ECI. The two-year appointment will focus on Global Ports Analysis. Prof Jim Hall said:

We’re delighted to be partnering with Gallagher Re for this new Fellowship which will deepen our understanding of threats to shipping and the implications for global maritime trade. Understanding and modelling these chokepoints will help us to ensure more resilient global systems.”

Nick Croxford, Head of Marine and Energy at Gallagher Re added: “The maritime insurance industry faces a myriad of challenges today, including environmental risks, cyber threats, geopolitical uncertainties and supply chain disruption. Getting under the bonnet and exploring both the challenges and potential solutions on the horizon is crucial to the industry, which is why we are so thrilled to be announcing this partnership today.”

More details on the Gallagher Fellowship will be announced next month.