How Trade Disruption Insurance (TDI) Can Save Your Business

What is Trade Disruption Insurance (TDI) and Why is it Necessary?

Trade Disruption Insurance (TDI) is a unique insurance solution designed to address one of the core challenges facing importers and business owners today: the inability to import and supply goods, even when no physical damage has occurred.

Most commercial insurance policies, such as property insurance or business interruption insurance, only activate if actual physical damage occurs-a fire in the warehouse, a flood, a burglary, and so on.

But what happens when there is no physical damage, but simply… the goods fail to arrive?

The shipment may be stalled due to a port blockage, a labor strike, a political shutdown, a global pandemic, or extreme weather conditions. In such situations, many businesses are left completely exposed-without the ability to claim compensation and facing losses that can sometimes total millions of dollars.

This is precisely where TDI steps in. It is specifically designed to protect businesses against loss of revenue, delays, additional costs, and cash flow damages, even when there is no direct damage to the cargo or property.

What’s the Difference Between TDI and Traditional Insurance?

At first glance, Trade Disruption Insurance (TDI) might seem similar to business interruption or marine insurance.
In reality, it’s a completely different product, designed to cover scenarios that traditional insurance policies often do not touch.

Here are some key differences:

This table highlights TDI’s advantage as a coverage tailored to today’s complex global reality, where even a single shipment delay or port closure can disrupt an entire supply chain.

Examples of Real-World Disruptions and How TDI Provides a Solution

In recent years, we have witnessed several global events that exposed the fragility of global supply chains. Importers across all sectors found themselves dealing with delays, cancellations, and losses that were not covered by any standard insurance policy.

Here are some examples:

• The COVID-19 Pandemic – Extended delays in sea and air freight, factory shutdowns, labor shortages, and border closures led to supply chain breakdowns. TDI provided coverage for lost profits, alternative storage costs, and unforeseen logistical expenses.

• The Russian Invasion of Ukraine – Port blockades, economic sanctions, and disruptions in raw material supplies led to a wave of cancellations and inventory shortages. TDI included protection against political risks and sovereign acts.

• The Blocking of the Suez Canal by the Ever Given Vessel – Large volumes of goods were stranded at sea for weeks, without compensation from traditional insurance. TDI policyholders received compensation for the resulting delays and accumulating additional costs from the incident.

• The Impact of the Israel-Hamas Conflict – With the expansion of the conflict and Houthi attacks on commercial ships in the Suez Canal and the Red Sea, many shipping companies rerouted vessels, causing widespread delays and significantly increasing transit costs. In such a situation, TDI provides crucial coverage for the added costs and the damage to profitability-even when no physical damage has occurred to the cargo.

These events illustrate how unpredictable the reality has become, and how vital it is to be covered even against scenarios that were previously considered exceptional.

Who Is Trade Disruption Insurance Suitable For, and When Should It Be Seriously Considered?

Although theoretically every business can benefit from the protection offered by TDI, there are specific situations and business profiles where this coverage becomes nearly essential.

Here are a few prominent examples:

• Importers Working with Politically Risky Countries: Businesses importing from countries like China, Turkey, Ukraine, East Africa, South America, or the Middle East face a constant threat of regulatory changes, coups, sanctions, or geopolitical instability.

• Businesses Relying on a Single Supply Chain or Exclusive Supplier: Any malfunction involving a key supplier can halt the entire production or sales line. TDI can cover alternative costs, compensation, and cash flow losses resulting from this dependency.

• Time-Sensitive or Seasonal Goods: For instance, seasonal products like holiday toys, summer fashion items, or food with short shelf lives. Any delay results in lost sales that cannot be recovered. TDI coverage helps minimize this damage.

• Companies in the Industrial, Pharma, or High-Tech Sectors: When components or raw materials arrive from multiple countries and involve complex logistics, a single short interruption in the process can impact an entire operation.

• Those Seeking to Protect Contractual Obligations: Whether it is a penalty for late delivery or a contract cancellation fee, TDI can offer coverage for contractual damages.

In other words… any business that relies on the stability of international trade should seriously consider adding Trade Disruption Insurance as an integral part of its risk management plan.

Who Underwrites TDI and How Is the Price Determined?

Trade Disruption Insurance (TDI) is a niche insurance product currently offered by only a limited number of global players.

Here are some of the key entities in this field:

• Tysers A prominent insurance broker from the London market, Tysers works in cooperation with Lloyd’s syndicates. It offers custom-tailored policies that cover delays, loss of profits, contractual penalties, and additional expenses even without physical damage.

• Tokio Marine Kiln (in partnership with Marsh) This group offers Port Disruption Insurance with coverage up to $50 million per event, including delays and disruptions at commercial ports and maritime transport hubs.

• Norwegian Hull Club One of the largest marine insurance companies globally, the club offers trade disruption coverage as part of its Loss of Hire insurance. It emphasizes rapid response, customization, and solutions for complex operational problems.

How is the Policy Priced?

The policy is structured based on profit margins, not the total value of the cargo. The cost can be reduced by demonstrating alternative logistics solutions.

The final price is influenced by:

• The scope of the business’s operations.
• The import sector and level of exposure.
• Geopolitical risk in the relevant regions.
• Insurance claims history.

And what about Israel?

Currently, no Israeli insurance companies offer built-in TDI policies. Existing coverage in Israel focuses on marine insurance, foreign trade credit insurance, or political risk coverage, with no solution for losses due to delays or disruptions that did not cause physical damage.

Importers from Israel who are interested in this type of insurance must turn to the international market, usually through specialized brokers.

In Conclusion

Trade Disruption Insurance (TDI) is not just a “nice to have” coverage, but a critical solution in an era where any small delay can turn into a major loss.

It provides a solution exactly where traditional insurance stops: when there is no physical damage, but the goods fail to arrive, supply is delayed, or a border is closed.

The coverage is particularly suitable for importers, manufacturers, traders, and companies whose operations depend on the continuous and efficient movement of products from one end of the globe to the final warehouse.

The fact that this is a unique insurance product, currently unavailable through Israeli insurance companies, only emphasizes the need to turn to the international market with an experienced agent.

For those interested in ensuring business continuity even in extreme situations, TDI is not a luxury, but a smart investment in the business’s resilience.

Expert Interview: Why Businesses Choose Trade Disruption Insurance

A professional discussion with industry experts explaining how unexpected events have made this type of insurance essential for every international supply chain (11:45 minutes).