Denmark has announced a big plan to support its shipping industry in case of potential conflicts.
The government plans to set aside nearly $1 billion to insure Danish cargo ships if private insurance companies stop offering coverage during dangerous situations.
On May 1, the Danish government announced that it would activate a special public insurance agency called the War Insurance Institute.
This agency will offer insurance when regular companies back out due to war or crisis. It will have access to a 6 billion-krone loan fund to help pay for any damage claims.
The Business Minister said that rising global tensions, especially in Europe, have pushed the country to be ready for worst-case scenarios. He said that it is better to be prepared ahead of time.
Denmark is a major player in global shipping. By the end of 2023, its merchant fleet was worth over 135 billion kroner (about $20 billion).
It’s also home to AP Moller Maersk, the world’s second-largest container shipping company, which runs more than 700 ships and handles around 17% of global container trade.
The new insurance plan is meant to act like a safety net- a backup incase war or political chaos makes it impossible to get regular insurance. The government stated that this is not a reaction to a specific event, but a smart move to stay ready.
This plan comes at a time when cargo ships are facing more threats in places like the Red Sea and the Gulf of Aden. Insurance costs for those areas have jumped, with war risk premiums going up 10 times in some regions.
Security reports show a 43% increase in attacks or incidents involving cargo ships over the past 18 months.
The Danish government plans to bring the bill to Parliament later in 2025, and if it’s approved, the system could start in early 2026.
Other shipping nations, like Singapore and Greece, are also exploring ways to team up with the private sector to cover insurance gaps during wartime.
Reference: Bloomberg
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