Fire, collision, inflation, climate change and sinking and damaged cargo are the top causes of marine insurance losses by value, according to Allianz Global Corporate & Specialty’s analysis of over 240,000 claims worth €9.2bn.
Inflation is compounding existing trends, driving higher claims severity, while soaring prices for steel and spare parts and rising labour costs are impacting hull repair and machinery breakdown claims.
At the same time, supply chain issues continue to impact claims, as do climate change related issues from extreme weather events to new exposures linked to the net-zero transition.
Climate change is increasingly affecting marine claim: natural catastrophes is already the fifth biggest cause of marine insurance claims, by frequency and severity according to AGCS analysis. Extreme weather was a contributing factor in at least 25% of the54 total losses reported in 2021 alone, while drought in Europe during 2022 again caused major disruption to shipping on shipping on the Rhine. In the US, it dropped inland waterways around the Mississippi River to levels not seen for decades, impacting global transportation of crops such as grain.
“The number of fires on board large vessels has increased significantly in recent years, with a string of incidents involving cargo, which can easily lead to the total loss of a vessel or environmental damage,” says Régis Broudin, global head of marine claims at AGCS. “At the same time, the shipping sector is also having to deal with many other challenges including a growing number of disruptive scenarios, supply chain issues, inflation, time-pressured crew members and employees, increasing losses and damages from extreme weather events, implementing new low-carbon technology and fuels, as well as Russia’s invasion of Ukraine.”
Although the signing of the ‘Black Sea Grain’ Initiative in July 2022 enabled some vessels trapped in ports to move out of the conflict zone others remain. The full value of these trapped vessels is unclear, but industry reports have estimated it could be as much as $1bn. Under some marine hull and cargo insurance policies an insured party may be able to claim for a total loss after a specific time has passed since the vessel/cargo became blocked or trapped.
Fires accounted for 18% of the value of marine claims analysed (equivalent to around €1.65bn) compared with 13% for a five-year period ending July 2018.