Modern Slavery - Marine Insurers' Nowadays Core Risk

Marine insurance has always priced tangible risks: storms, piracy, sanctions, and cargo loss.

Today, however, a new force is reshaping the underwriting landscape, one that traditional risk models cannot capture: modern slavery and forced labour in global supply chains.

According to the ILO, an estimated 28 million people are trapped in forced labour. The International Union of Marine Insurance (IUMI) has warned that insurers can no longer ignore this reality. Sectors tied closely to marine insurance, shipping, fishing, agriculture, textiles, manufacturing are under intense scrutiny.

The financial consequences are mounting. Regulators are tightening rules with legislation like the EU's Corporate Sustainability Due Diligence Directive (CSDDD), which holds companies accountable for their entire value chain. Investors are asking tougher questions during ESG screenings, directly impacting capital access. And a wave of lawsuits against major seafood and agriculture companies shows how quickly reputational damage from labour exploitation translates into D&O liability and severe financial exposure.

Imagine a vessel is detained in a European port under suspicion of forced labor violations among its crew. The immediate result is a business interruption claim. But the cascade has just begun. The cargo's owner, a major retailer, invokes a new ethical sourcing clause and cancels its contract, triggering a trade disruption claim. The vessel's managers face a Directors & Officers (D&O) liability lawsuit for neglecting their due diligence. The story hits the press, and the insurer's own ESG rating comes under fire from investors. This is no longer a remote possibility; it is the new reality of interconnected risk.

Beyond the Numbers

Technology has sharpened efficiency in underwriting. Models can track loss ratios, flag high-risk routes, and optimize pricing with speed.

But exploitation doesn't appear on a loss-ratio spreadsheet. It’s hidden in opaque crewing contracts, unethical recruitment chains, and the lived reality of seafarers. This is where human judgment becomes the critical line of defense: the underwriter spotting red flags in a client’s convoluted ownership structure, the broker questioning a manning profile that seems 'too good to be true' for the region, or the claims handler recognizing the signs of labour abuse in a crew dispute.

These aren’t inefficiencies. They are safeguards. Lose them, and insurers lose the very defenses that protect against reputational, legal, and financial fallout.

Building Ethical Resilience

Technology is still vital. But its role must shift. Algorithms can flag anomalies in shipping patterns or supply chains, but humans must interpret them through the lens of ethics, law, and local realities.

This shift requires new expertise: forensic accountants who can trace complex ownership structures designed to obscure liability, and maritime legal experts who understand the enforcement gaps in frameworks like the Maritime Labour Convention, 2006.

And most of all, it requires a mindset shift: from measuring only probability (what’s likely to happen) to weighing plausibility and impact (what could happen if exploitation is uncovered).

The end goal isn’t just operational efficiency, it’s ethical resilience, aligning underwriting with human rights standards while protecting insurers from reputational harm.

To Conclude

Marine insurers have always priced for storms and conflict.

Now they must also account for risks that don’t appear on weather charts or loss histories.

The ultimate risk is not a single disputed claim, but the erosion of trust if the industry is seen as profiting from — or underwriting — the hidden storm of modern slavery.