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For years, determining the insured value of cargo was primarily a technical exercise. Today, it also requires anticipating how rapidly economic and trade conditions can change.
Inflation and the uncertainty created by changing tariff policies are reshaping international trade. Yet one of their least visible consequences extends beyond supply chains. They are also changing how companies assess operational risks and structure their insurance coverage.
Inflation has become a significant challenge for the insurance industry, particularly in international trade. Its impact extends beyond rising prices. It also lies in the growing difficulty of determining what the actual value of cargo will be by the time it reaches its final destination and, consequently, what the appropriate insured value should be.
Trade uncertainty continues to reshape global trade flows and accelerate changes across supply chains, requiring companies to rethink how they assess the risks associated with their operations. As the International Union of Marine Insurance (IUMI) also warns, geopolitical and trade tensions are creating an unprecedented level of uncertainty for the marine insurance sector, driven by war risks, tariffs and other economic measures that continue to reshape the global trading environment.
In cargo insurance, the insured value should reflect the value of the goods at their final destination. This requires insureds to take into account factors such as future price movements, logistics costs, tariffs, and other related expenses. The greater the economic uncertainty, the more challenging it becomes to determine the appropriate insured value.
This is where one of the greatest challenges for businesses emerges. The issue is no longer simply determining what cargo is worth today but estimating what it will cost to replace if a loss occurs in weeks, or even months later, under potentially very different market conditions.
As inflation rises or transit times lengthen, uncertainty increases proportionally. This heightens risk and requires increasingly accurate projections when establishing insurance coverage. Undervaluation may result in underinsurance and claim settlements that fail to reflect the actual loss, while overvaluation can lead to unnecessary premium costs without providing any additional protection.
Tariffs add another layer of complexity. Because they form part of the final landed cost of goods, any change in tariff levels can directly affect insured values. While their impact is often assessed from a financial or commercial perspective, it can also become a determining factor in how a policy responds when a claim occurs.
However, tariffs do more than increase costs. They are also reshaping international trade
Changes in suppliers, the use of new ports, alternative shipping routes, and the relocation of operations are all strategies adopted in response to evolving trade barriers. At the same time, each of these changes alters the overall risk profile of an operation.
According to Allianz Commercial, approximately 90% of international trade continues to be transported by sea. In an environment where supply chains continue to evolve, any disruption to shipping routes, transit times or logistics infrastructure can create new exposures that did not exist when the policy was originally placed. The greater the transformation of the supply chain, the greater the likelihood that the insured values established when coverage was arranged will no longer reflect the reality of the operation when a claim ultimately occurs.
When risk evolves faster than the policy
In our experience, these changes often become apparent only when a claim is filed. It is at that point that seemingly minor differences between the insured value and the actual value of cargo, or between the operation originally assessed and the one ultimately carried out, can have a significant impact on the claim settlement.
Understanding today's economic environment is therefore only part of the solution. The real challenge lies in translating these market changes into accurate risk valuation, properly interpreting policy terms and applying the technical expertise required to manage claims in accordance with the legal and regulatory framework, as well as the market practices, of each jurisdiction.
In an increasingly dynamic environment, regularly reviewing insured values should no longer be viewed as an administrative task. It is a strategic decision that can make the difference between having adequate protection and discovering, too late; that risk evolved faster than the policy itself.
For 85 years, Crawford has supported businesses around the world in managing complex claims by combining technical expertise, local market knowledge, and a global perspective on international trade. That experience enables us not only to respond effectively when losses occur, but also to help clients better understand how economic and logistical changes influence their risk profile while delivering agile solutions that reduce both the time and cost associated with claims.
Because in today's global trading environment, the question is no longer simply whether cargo is insured.
The real question is whether its insured value will still be the right one when the policy is ultimately called upon.
