Recent accidents in the shipping industry – and design trends of ships more generally – should be posing questions for marine hull and cargo insurers, according to the International Union of Marine Insurance (IUMI).
IUMI’s president Dieter Berg used a press conference in London to talk about the Hoegh Osaka incident, when the vehicle carrier grounded off Southampton, UK, on January 3.
The gigantification of container ships and tanker vessels, as well as more particular stability problems of car carrier designs, need to be addressed from an insurance risk perspective, he suggested.
“In a nutshell, 2014 ended poorly and 2015 started badly,” said Berg, who is also a senior executive manager marine at Munich Re, referring to the soft market pricing picture.
Berg and his IUMI colleagues noted that pricing pressure has not eased off for marine insurers and reinsurers, amid excess capacity supply.
Underwriters are displaying typical weaknesses, writing for market share rather than pricing discipline, IUMI noted, continuing themes from the industry body’s Hong Kong conference last September.
There is still a high degree of uncertainty over the scale of the insurance loss for the Osaka event.
“We have to expect all those cars are a total loss for the insurers,” said Berg, citing a $100m loss estimate figure quoted from Reuters.
However, within the past day many of the cars have been driven ashore from the Osaka, many displaying varying degrees of superficial damage – but potentially not write offs.
The ship was carrying 1400 cars, including luxury Land Rover, Rolls Royce, Jaguar and Porsche brands. The Osaka was deliberately grounded to prevent it capsizing, developing a 52” list.
Berg said stability was a “major problem” for the so-called roll-on, roll-off (RoRo) vehicle carriers.
“Once water enters, they are vulnerable,” he added.
Berg also referred to a similar accident when the Cougar Ace nearly capsized in 2006 off the Aleutian Islands in the North Pacific.
That event led to 4,700 Mazda cars on board the vehicle carrier being written off, by the time the ship’s 60” list had been corrected, allowing her to limp into Portland, Oregon three weeks later.
Disasters involving RoRo vessels include the fatal capsizing and sinking of the Herald of Free Enterprise ferry in 1987.
Berg noted that new car carriers being designed in Asia now had capacities of 8,000 vehicles.
New “mega” vessels being built, such as Maersk’s Triple E class of container ships, and the TI class of ultra large crude carrier tankers, posing increasingly complex risk questions for insurers, IUMI suggests.
Risk topics posed included difficulties in salvage operations should such huge vessels be damaged or sink, concentration risks from storing their vast cargoes ashore, as well as greater complexity from some of the new larger and deeper drilling rigs coming into service.