Modern Slavery and Marine Insurance: Growing Legal and ESG Pressures

Marine insurers are facing growing calls to broaden their understanding of modern slavery and forced labour across the maritime industry and global supply chains. As scrutiny from regulators, investors, and clients intensifies, the sector is under pressure to ensure it is not indirectly enabling unethical practices.

A new Information Paper from the International Union of Marine Insurance (IUMI) highlights the increasing damage to the reputation of insurers, along with legal hassles for those who underwrite businesses linked to exploitative labour. While insurers are not directly involved in abuses, a lack of proper checks may mean they are unintentionally supporting clients engaged in modern slavery.

A Global Problem

Modern slavery affects an estimated 28 million people worldwide. According to IUMI Secretary General Lars Lange, this includes forced labour, human trafficking, and exploitative recruitment. These practices extend across industries connected to marine insurance, such as fishing, shipping, textiles, agriculture, and manufacturing.

Certain areas are particularly vulnerable. Distant-water fishing, garment production, and seafaring within the maritime industry are identified as high-risk sectors where labour exploitation remains a serious concern.

Read More: ISS ESG's Enhanced Modern Slavery Solution for Investors

Rising Legal and Regulatory Pressure

The risks are ethical and legal. Recent lawsuits against leading seafood and agriculture companies highlight how firms can face serious consequences if linked to forced labour. Meanwhile, regulations such as the EU Corporate Sustainability Due Diligence Directive (CSDDD) and the UK Modern Slavery Act are increasingly holding companies, and their financiers, responsible.

The maritime sector itself is also under strain. The International Maritime Organization (IMO) reported record levels of seafarer abandonment and denial of shore leave in 2024, showing how workers in this industry remain vulnerable to abuse.

Recommendations for Insurers

To alleviate these risks, IUMI’s paper sets out several key steps for insurers. These include conducting robust due diligence during underwriting, implementing clear Environmental, Social, and Governance (ESG) policies that include human rights protections, and working with stakeholders to increase transparency across supply chains.

Lange acknowledged that insurers are “one step removed” from the operations they cover, which makes detecting abuses difficult. The complexity of global supply chains adds to the challenge. However, he stressed that insurers cannot afford to remain passive. “However, as far as possible, marine insurers should take a proactive stance – not just to protect reputations, but also to align the insurance industry with global human rights standards,” he said.

Increasing ESG Expectations

The call comes as ESG expectations mount across industries. Investors, regulators, and customers are increasingly demanding that organizations exhibit responsible behaviour. For insurers, that means ensuring their policies and practices reflect international human rights standards.

Industry experts believe marine insurers should take a more proactive stance to protect their reputations and show leadership in fighting modern slavery. By strengthening their frameworks and engaging in wider industry discussions, insurers can help ensure they are not complicit in labour exploitation.

Also Read: ESG Rollback in Europe Triggers Investor Legal Strategy Shift

A Path Forward

The IUMI paper concludes that the insurance industry has a critical role to play in tackling modern slavery. By integrating ethical considerations into underwriting and collaborating across supply chains, insurers can make a significant difference.

For an industry that underpins global trade, the message is clear: Marine insurers cannot ignore the risks of modern slavery. Addressing the issue is about protecting vulnerable workers and about safeguarding the industry’s credibility in a world where ethical business is no longer optional.

Follow more news and views via our Regulators and Featured Articles sections, and stay updated on the top ESG events to attend in 2025 for industry insights and networking.

Source: Marine Insight