Allianz Global Corporate & Specialty insurance company released a report analyzing marine insurance claim trends from 2017 through 2021. The report includes over 240,000 claims from around the world worth billions of dollars. Allianz’s analysis of these claims found troubling trends that raise insurance claims costs but also put maritime workers at risk of injury or death.
Fire Accounts for Biggest Share of Claims Value
The biggest share of claims in dollars over the five years was fire or explosions on ships. One important and growing cause of the costs of fires is dangerous cargo, particularly lithium-ion batteries. The report also found that dangerous cargo is often undeclared or mis-declared, which contributes to insurance claim costs.
Another troubling reason that fires might be increasingly expensive on ships is the prevalence of engine room fires. The insurance report found that competency among crew members could be at the root of this trend. If crew are not adequately trained or experienced enough to work in the engine room, fires and accidents can result.
Collision with Sinking is the Second Biggest Maritime Expense
The second most expensive share of claims is ship collisions often resulting in sinking. The primary cause of losses across all ship types was foundering, also known as sinking.
These are known as total losses and are obviously costly when it comes to insurance claims. The total number of ships sinking has dropped, but the value of ships and cargo has increased, accounting for much of the growing costs of these claims.
The primary hotspot for total losses is in Asian waters, particularly in the regions of South China, Indochina, Indonesia, and the Philippines. One in five total losses from 2021 occurred in these areas.
Cargo Damage Results in the Most Frequent Claims
While losses and fires account for the highest share of claims by total cost, damage to cargo results in the highest total number of claims. Most common, Allianz found, was physical damage due to poor storage, packing, and handling of cargo.
Another issue for cargo damage is theft. The theft of high-value goods, especially electronics, is on the rise in the maritime industry. Also frequently stolen are commodities, like copper.
Other Incident Trends in the Maritime Industry
Other costly incidents or accidents trending according to the report include machinery failures and natural disasters. The latter is likely due to climate change. By both frequency and severity, natural disasters are now the fifth largest cause of claims. Problems include hurricanes and other more frequent severe storms as well as droughts leading to low water levels in some shipping channels.
Safety in the maritime industry has improved in recent years, while incidents have declined, according to Allianz. The value of ships and cargo and other factors continue to make shipping losses costly. In addition to the costs of incidents, harm to workers is a major concern. Fires, sinking, and natural disasters all put maritime workers and risk and must be addressed in order to make shipping safer.