The duration of the strike will determine the impact on the P/C insurance industry

The International Longshoremen’s Association (ILA) went on strike on Tuesday, October 1st. The strike is expected to affect more than 20 ports along the East and Gulf Coasts, including ports in New York and New Jersey, Baltimore and Houston.

Focusing specifically on the impact of the strike on the property/debt industry – and given the specific commodities transiting those ports – the impact will be most direct on homeowners, personal and commercial vehicles, and commercial property. More specifically, the strike may result in increased replacement costs and delays in the delivery and replacement of homeowners’ contents, such as clothing and furniture; of European-made vehicles and spare parts; and concrete, especially for commercial construction.

However, the impact of the strike will be significantly mitigated by the current inventories for each of the affected insurable goods and the tightening of the related just-in-time supply chains. At the very least, Triple-I estimates, the strike would need to last one to two weeks to trigger further sustained increases in P/C replacement costs or accelerate an ongoing slowdown in underlying P/C growth.

Another way the insurance industry would be affected is the loss of coverage that protects against adverse business costs of events such as strikes. These coverages include, but are not limited to, business interruption, political risk, credit, supply chain insurance, and some marine and cargo. However, most of these policies have waiting periods of between five and 10 days and then deductibles, before payment is triggered. As a result, losses for those lines are likely to be limited if the strike lasts less than one or two weeks.

Using a one- to two-week timeline is helpful: the last major land strike in the United States—at the Port of Long Beach, California, in 2021—lasted a week.

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Market real estate crash