Mega ships a mega problem

Technological advances mean large shipping losses have declined 38% over the past decade with this downward trend continuing in 2017. But concerns remain of the potential for future evolving losses, according to Allianz Global Corporate & Specialty’s (AGCS) Safety & Shipping Review 2018. There were 94 total losses reported around the shipping world in 2017, down from 98 the year before. Bad weather, such as typhoons in Asia and hurricanes in the US, contributed to the loss of more than 20 vessels. However, there was once again a decline in the number of total losses – a continuation of the positive trend witnessed over the course of the past decade. With a few notable examples, marine insurance claims during that time have been relatively benign, reflecting improved ship design and the positive effects of risk management policy and safety regulation. However, as the use of new technologies onboard vessels grows, developments in the maritime loss environment are expected. New risk exposures for the shipping sector include: • Ever-larger container ships pose containment and salvage issues; • Changing climate conditions bring new route risks, particularly in the Arctic and North Atlantic waters; • Environmental scrutiny over emissions; • Grappling with increasing automation on board. The most pressing issue for marine insurance is the rise of mega ships, according to Andrew Kinsey, senior marine risk consultant at AGCS, tells Reactions. “The scale is simply mind-boggling,” he says, adding that ships are now quadruple the size of ones he worked on earlier in his career. They also present a huge array of issues, such as firefighting and how shipowners can manage the risk. “It can’t be left for the ship to look after itself,” says Kinsey, criticising the cultural shift that has led to a ‘normalisation of risk’. “All parties must acknowledge and work together to mitigate the risks,” he adds. Human error Despite decades of repeated safety improvements, the shipping industry has no room for complacency. Sadly, fatal accidents remain common – with human behaviour often a factor as crews are stripped to the bone by owners and charterers looking to maximise profits. Human error is estimated to be behind 75% to 96% of shipping accidents. Human error can also be attributed to some three quarters of the 15,000 marine liability insurance industry claims, valued at $1.6bn, that were analysed by AGCS. “Crews are under pressure as shipping supply chains are streamlined for greater efficiency,” says Kinsey, who is explicitly critical of the practice when speaking to Reactions. “While vessels once spent weeks in port, turn-around times for a cargo ship are now measured in days. Such schedules can have a detrimental effect on safety culture and decision-making,” Kinsey says. “It’s subject to a lot of confusion,” he adds, noting that “eliminating human errors does not eliminate loss”. “There is always the need to strike the right balance between safety and commercial pressures. We need to look at behaviour modification and how to get personnel to move away from normalising risk,” he explains, showing that insurers might have a tough battle on their hands of they want to increase safety aboard commercial container ships. Moving forward, Kinsey says that staffing levels for crews must be increased, and they must be better qualified with more engineers and IT professionals on board, as well as experienced mariners. Better use of data and analytics could... CLICK HEADLINE TO READ MORE

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