Risk of a big war insurance claim is rising: marine insurers

The risk of a big claim stemming from the war in the Middle East is increasing, panellists commented at the Marine Insurance Asia conference on Thursday (Apr 23). 

Rolf Thore Roppestad, CEO of specialised marine insurer Gard, spoke of an increasing risk environment as crews are under pressure for being trapped in the Middle East after the US and Israel waged a war on Iran on Feb 28.

In addition, there are cargoes that are not fit for purpose anymore or those that are damaging the hull – or body – of the ships due to different types of impact from chemicals and sulphur.

There are reportedly about 20,000 crew members and 800 vessels still stuck in the war zone.

“I think in many of these cases, we don’t really know today where the bill is going to end up because a lot of it is untested ground,” added the chair of the International Group of Protection and Indemnity (P&I) Clubs who was appointed to the role last November.

P&I Clubs are mutual insurance associations owned by shipowners and charterers, providing liability coverage for maritime risks such as oil spills, cargo damage and crew injury. They operate on a non-profit system, covering about 90 per cent of global ocean-going tonnage.

Agreeing, David Roberts, head of Asia at Britannia P&I Club, said: “I think sadly the risk of a big claim occurring is increasing due to... the crew... fatigue, the frustrations, the concentration of tonnage in particular areas.

“So that risk we would see is, unfortunately increasing and... this conflict sadly shows no sign of immediate near-term abatement.”

Lars Lange, secretary general of the International Union of Marine Insurance, pointed out that it is much easier to address a single vessel incident but not when geopolitics gets involved as it is “out of our hands and so far we cannot entirely assess our risk”. 

He also does not think that the proposed insurance guarantees by the US International Development Finance Corporation for oil tankers and other vessels through the Strait of Hormuz is necessary because the industry does have the coverage.

Iran has effectively closed the strait after the military actions commenced, by attacking vessels that attempt to transit without its permission.

Roppestad emphasised that the mutual P&I cover has been in place throughout all the past crises to reassure shipowners of protection.

The panel discussion was moderated by Michael Walls, head of marine, cargo and logistics for Asia at insurance broker Marsh.

Marine Insurance Asia, a one-day event, was held in conjunction with Singapore Maritime Week.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

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