Large shipping losses at lowest level since turn of century: AGCS

Large shipping losses were at their lowest level last year since the turn of the 21st century, according to maritime statistics from Allianz Global Corporate & Specialty (AGCS). There were just 45 total losses globally in 2018. This is down from 98 in 2017 and 55% lower than the ten-year average of 104. It is the fourth consecutive year that the number of large ship losses has fallen and is half the previous low of 89 in 2014. Publishing its Safety and Shipping Review 2019, AGCS said “fortunate circumstances”, driven by a quieter storm season compared with 2017, helped reduce large shipping losses last year. Weather-related large losses halved to ten in 2018. Losses recorded in top accident hotspot southeast Asia were also down, from 29 to 12. This is the first time the region has recorded a fall in total losses for four years. The east Mediterranean and Black Sea recorded the second-highest number of total shipping losses, with six. The British Isles was third with four total losses, down from eight in 2017. During the past ten years, the British Isles, North Sea and English Channel have recorded 77 total losses and rank as the fourth-highest region for losses. Of the 45 total global losses in 2018, the majority (30) were caused by sinking or foundering. During the past ten years, foundering has been the root cause of 551 of the 1,036 total losses. It is the most expensive cause of loss for insurers, with an estimated value of more than $1.5bn of claims in the past five years. Despite the improvement in large losses, the total number of maritime accidents was stable at 2,700 last year. AGCS said machinery damage accounts for more than one third of 26,000-plus incidents recorded in the past ten years. It is the costliest claim for marine insurers, which have paid out more than $1bn in claims in the past five years. The east Mediterranean and Black Sea was the global hotspot for shipping incidents in 2018, with 544 reports. With traditional safety issues largely in hand, shipping companies are facing risks from other directions. Baptiste Ossena, global product leader for hull and marine liabilities at AGCS, said political risks to vessel security, new 2020 regulations to cap sulphur oxide emissions, and onboard fires are the new challenges for maritime safety. Fires accounted for 174 of incidents in 2018, and AGCS said this marks an upward trend that has continued into 2019. It blamed mislabelling of dangerous goods and limited onboard firefighting equipment for the recent large losses. “Fire onboard ultra-large container ships is our biggest concern right now. Insurers have highlighted this as a growing risk in recent years and, sadly, this has proven correct,” said Captain Rahul Khanna, global head of marine risk consulting at AGCS. AGCS said several factors are creating challenges for shipping companies ahead of the new sulphur oxide emission regulations in January 2020. AGCS said the new rules could be a “game-changer” for shipping firms as they get to grips with cost implications and logistical issues of switching to more expensive low-sulphur fuel, and the potential impact on the mechanical efficiency of ships. “Despite the fast-approaching deadline, there is still a lack of international standards and concern over the availability and compatibility of low-sulphur fuel,” said Captain Khanna. “Insurers are concerned about a potential increase in machinery breakdown claims with the introduction of low sulphur fuels, if the transition is not well managed. There is also potential for disruptions and delays to voyages if there is a lack of compliant, compatible fuel in port,” he said. At the same time, AGCS said the increase in size of shipping vessels is increasing accumulation risk and higher claims for incidents. “While we have seen total losses reduce over the past decade, the benefits are being largely offset by the increased cost of losses for large vessels. The cost of casualties or incidents is rising, with an increase in severity, and this is down to the increasing size of vessels. Such ships generate economies of scale for ship owners but also increased risk, and a disproportionately greater cost when things go wrong,” said Captain Khanna.

Large shipping losses at lowest level since turn of century: AGCS

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