COVID-19 to Affect Marine Insurance
Global Marine Insurer, Allianz Global Corporate and Specialty SE's (AGCS) has said the coronavirus pandemic has endangered the long-term safety improvements in the shipping industry for 2020 and beyond.
The marine insurance giant, observed that the difficult operating conditions and a sharp economic downturn caused by the pandemic presents a unique set of challenges for marine insurers and maritime operators.
AGCS, in its Safety &Shipping Review 2020, noted that though the shipping industry has continued to operate through the pandemic, despite disruption at ports and to crew changes, reduction in sailing due to restrictions could see loss activity fall in the interim.
It however highlighted challenges that could heighten risks in the face of the pandemic.
The Global Head of Marine Risk Consulting at AGCS,Captain Rahul Khanna, said: "Piracy remains an ongoing issue. We thought we had a handle on it but it has manifested yet again.
"Hijackings by Somalian pirates may have reduced for now, but incidents have been increasing in West Africa and parts of Asia, where we see a worrying pattern of violent attacks against crew, as well as kidnappings.
"Ship-owners also face additional cost pressures from a downturn in the economy and trade. We know from past downturns that crew and maintenance budgets are among the first areas that can be cut and this can impact the safe operations of vessels and machinery, potentially causing damage or breakdown, which in turn can lead to groundings or collisions. It is crucial that safety and maintenance standards are not impacted by any downturn."
He added: "According to the report, the South China, Indochina, Indonesia and Philippines maritime region remains the top loss location with 12 vessels in 2019 and 228 vessels over the past decade - one in four of all losses. High levels of trade, busy shipping lanes, older fleets, typhoon exposure, and safety issues on some domestic ferry routes are contributing factors."
The report, however, stated that in 2019, losses declined for the second successive year, highlighting that the Gulf of Mexico recorded four and the West African Coast three, ranking second and third. The East African Coast was on the fourth spot.
According to the report, cargo ships with 15 cases accounted for more than a third of vessels lost in the past year, while foundered (sunk/submerged) was the main cause of all total losses, accounting for three in four with 31 cases.
The report noted that bad weather accounted for one in five losses, adding that issues with car carriers and roll-on/roll-off (ro-ro) vessels remain among the biggest safety issues.
"Total losses involving ro-ros are up year-on-year, as well as smaller incidents (up by 20%) - a trend continuing through 2020," it added.
The report further noted that the rise in number and severity of claims on ro-ro vessels was raising concerns explaining that Ro-ros can be more exposed to fire and stability issues than other vessels.
This article was originally published by This Day. Photo: Allianz