More capacity needed for environmental marine risks say experts

The experts also said that the insurance market, in particular the P&I sector, did its job during the Prestige oil tanker spill in 2002, even though no money was paid by the industry to indemnify the environmental damage caused. The Prestige oil spill is one of the worst environmental catastrophes to have ever hit Europe. The Greek-operated, Bahaman-registered oil tanker sunk off the coast of northern Spain in November 2002. The consequent spill caused huge damage to the coastlines of Spain, Portugal and France. The Spanish authorities assigned blame to the tanker's captain and officials, while the owners argued that the ship was denied access to a safe harbour by the Spanish Coast Guard after its crew identified problems.hideThe case created a media uproar in Spain and it took 11 years to decide who was responsible for the disaster. But in November 2013 the courts finally acquitted the tanker's captain and chief engineer of crimes against the environment. This verdict prevented the authorities from making liability claims against the ship-owner and its insurers. Environmental damages caused by the spill are estimated at over €4.3bn. Speaking at a seminar on the disaster organised by AGERS, one of Spain's risk management associations, José Manuel Castillo Moreno, Head of the Maritime Department at Mapfre Global Risks, said the Prestige was covered by a bulk insurance policy placed in the international market and a protection & indemnity policy issued by the London P&I Club with a limit of $1bn. The latter coverage caused much controversy in Spain as the P&I club fought against efforts by the Spanish and French authorities to claim for damages. But Mr Castillo said that the insurance market behaved correctly in this case. He said that P&I coverage is not meant to pay for the direct reparation of liability damages, but rather for the exposure of buyers to an event. As the courts could not establish the ship-owner's guilt, its exposure to liability claims was limited and there was no technical justification to trigger the P&I coverage. "At some point people started to believe that there would be a bonanza of money coming from the insurance industry. But the fact is that the money was never there," said Ramon Romero, a maritime insurance expert at Willis Iberia. Mr Romero also said that the authorities' expectation that insurance would pay for the environmental damage was misplaced, which influenced the expectations of public opinion. "The claim made by the Spanish government was higher than the annual premiums of the whole P&I sector," he said. "The idea was sold to the public that there was an economical solution for the Prestige, but that has never been the case." Mr Romero pointed out that the accident was simply not P&I related. He warned however that the current limits of P&I coverages could be insufficient for the evolving needs of the maritime transportation industry. For his part, Jose Luis Heras, General Director at Pool Español de Riesgos Medioambientales, Spain's environmental risks pool, noted that the exposure of ship owners and oil companies to environmental risks in the seas is becoming more severe. The actions of the US authorities against BP following the Gulf of Mexico spill in 2010 and the implementation a new European directive on the safety of offshore oil and gas operations last year, illustrate this trend, he said.

More capacity needed for environmental marine risks say experts

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