SIMIC

FIRE risk, Russo-Ukraine war, decarbonisation, economic uncertainty, and the rising cost of claims mar an otherwise pleasing insurance assessment picture, marked by a record low numbers of lost ships, reports Sydney's Insurance Business.

But the Allianz insurance giant's Safety & Shipping Review 2023 reported an increase in fires due to electric vehicles and battery-powered goods, especially flammable lithium-ion batteries.



"Yet shipping losses have sunk to the lowest number in 12 years, reflecting the positive impact of safety programmes, changes in ship design and regulation," said Rahul Khanna, global head of marine risk consulting at Allianz Global Corporate & Specialty (AGCS).



"While these results are gratifying, several clouds appear on the horizon. More than a year after Russia's invasion of Ukraine, the growth of the shadow oil tanker fleet is the latest consequence to challenge shipowners, their crew, and insurers," said Captain Khanna.



"Fire safety and the problem of mis-declaration of hazardous cargo must be fixed if the industry is to benefit from the efficiency of ever-larger vessels. Inflation is pushing up the cost of hull, machinery, and cargo claims. Meanwhile, although the industry's decarbonisation efforts are progressing, this remains by far the sector's biggest challenge. Economic pressures could put vital investments in companies' strategies, as well as in other safety initiatives, in jeopardy."



There were 38 total losses of vessels reported globally in 2022, compared to 59 in the previous year, marking a 65 per cent decline in annual losses over the past decade.



But more than 800 total losses have been recorded in the last 10 years, with South China, Indochina, Indonesia and the Philippines maritime region being the global loss hotspot, accounting for 204 total losses over the past 10 years. Fire/explosion and vessel collision were among the top causes of losses.



Although total losses have decreased, the number of shipping casualties or incidents reported remained consistent. The British Isles saw the highest number of incidents, with machinery damage or failure being the leading cause globally, AGCS reported.