With CUSMA back on the table and Canada actively courting new trade partners, importers and exporters are looking well beyond the US border. For marine underwriters, that means the risk conversation is moving from simple truck routes to more complex questions about commodities, routes and who actually insures what.
Michael Wright (pictured), head of marine at HDI Global SE – Canada, said the starting point is understanding how different goods behave under stress – and how buyers react when something goes wrong.
On the tariff side, he noted, the basics haven’t changed.
CUSMA, he said, “is essentially a modernization of NAFTA”, which at its core is about eliminating trade tariffs. But the bigger implications lie in what is moving.
“You know what classification of cargo is going to be in demand between countries – dairy obviously is one of the bigger ones that we’re discussing, automobiles is another one,” he said. “The nature of the cargo does have an effect on risk.”
If it’s general merchandise going from Windsor, Ontario, down to Texas, the main exposures are familiar: theft, or a truck fire. “A good underwriter will envision that,” Wright said. “But if there is an opening of dairy products, it’s a very different commodity.”
With food and other sensitive goods, Wright said the key risk is often “fear of loss” rather than visible damage.
He said that when temperature-sensitive goods such as food are shipped, for example, from a producer in Wisconsin to a receiver in Alberta, even a broken seal on the container or trailer can trigger a rejection. Many receivers have strict risk‑management policies that treat a broken seal as a potential sign of tampering, so they will refuse the load outright.
That logic applies beyond food.
Wright recalled a shipment of automotive headrests moving from Windsor to Mexico. The truck was rear‑ended, but the components themselves were untouched.
“There was no damage at all to the cargo. But because it was an accident, the risk manager in Mexico had to reject the cargo because he could not certify that the cargo was safe for being installed in a vehicle,” he said.
The issue wasn’t dents or scratches – it was fear of loss.
In that case, he worked with the client to avoid a total loss.
“Part of my job as an underwriter is to help mitigate that loss,” he said. “They said, ‘Oh, we’ll just do some testing.’ So using a… a testing standard, we sampled the headrests and found no problems. And it met their risk management criteria.”
The cost of the testing, he added, was “far less than actually paying out the claim.”
As manufacturers seek alternatives to US buyers and suppliers, Wright expects more Canadian goods to move further afield – both inland and overseas.
He said a prudent manufacturer will be looking for alternative markets regardless of how the CUSMA talks play out, and that this is already visible in the increased volume of goods moving internationally today.
That brings back all the classic ocean risks: general average, fear of total loss, jettison, washing overboard, he said. “Vessels lose cargo every single day. They run aground. They collide. They lose power. They declare general average. It happens all the time.”
But even where shipments stay on land, geography matters. More north–south trade with Mexico, for example, changes the risk map for Canadian underwriters.
“Mexico does have a higher-than-average crime factor, so that increases the risk to the Canadian insurer,” Wright said. “Many Canadian insurers are very wary in covering shipments through Mexico. There are sections of Mexico that a knowledgeable underwriter is aware are safe. But once you head down through the cartel regions, then you get risk of hijacking.”
On the import side, Wright expects Canadian buyers to look harder at other free‑trade partners – the UK, Asia‑Pacific countries, Ukraine – as well as markets like China, where he noted there is at least a memorandum of understanding on certain trade flows.
As they do, terms of sale and Incoterms will become more important – particularly CIF (cost, insurance and freight) arrangements where an overseas seller controls the insurance up to a Canadian port.
He said that under a CIF arrangement, the overseas seller is responsible for insuring the cargo up to the named port, but once it arrives there, the obligation to insure the goods shifts to the buyer.
The problem comes when there’s a claim in Canada.
“What are the odds that that Canadian claimant is going to have a Chinese insurance company pay that claim? We don’t know,” Wright said. “We don’t have a direct relationship with that Chinese insurance company.”
Beyond collectability, he added, the buyer often has no visibility into the fine print.
He said that in those situations, the Canadian buyer often has no visibility into how the foreign insurer operates – what terms and conditions apply, what deductibles or exclusions are in place – and there is even a risk that the exporter never paid the premium, meaning the policy could have been cancelled without the buyer knowing.
“There’s a lot of unknowns in that CIF transaction,” he said. “Obviously, the importer has a greater risk and that’s where technical underwriting comes in… to create a policy that covers the importer’s risk as it increases, because they’re looking for other markets.”
