- Insurance broker Aon has launched a new policy aimed at sectors for which fuel purchasing constitutes a significant cost, with major interest expected to come from shipping.
- The new policy enables to lock in an agreed price limit for bunker purchases and which will pay out on a monthly basis if the price ceiling is exceeded.
Aon has announced the launch of a new fuel insurance product designed to help shipping and aviation companies protect against rising fuel costs, reports Splash247.
Insurance to cover the fuel price difference
The coverage, backed by AAA-rated credit insurance, will be activated if the cost of fuel rises to exceed an agreed-upon limit. The policy will cover the difference between the agreed-upon price and the higher price, paid out monthly.
The coverage will help companies manage their fuel-cost exposure and avoid significant spikes in market price, Aon said.
“This insurance product can provide a valuable solution to companies that consumer large amounts of fuel, including marine, aviation, construction, mining and energy, and is one of the first of its kind commercially available in the sector,” Aon said.
Promoting resilience and sustainability
“Aon is committed to identifying, understanding, and developing innovative solutions to meet our clients’ evolving needs,” said Chris Bhatt, global head of sales, marine, at Aon.
He added, “With the launch of this solution, we are pleased to support our clients as they navigate an increasingly complex commercial environment and address long-tail risks to promote corporate resiliency and sustainability.”
LSFO price surge
The implementation of the IMO 2020 0.50% global sulphur cap was the catalyst for the development of the new insurance product. While the cost of lower sulphur fuels surged in early 2020, the impact of COVID-19 on global trade and energy demand saw a collapse in bunker prices across all grades.
There has been a price rebound since the low point of April and May last year, but further bunker price volatility is expected in the short term.
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