Major vessel casualties on the rise, says marine insurance group

Major vessel casualties on the rise, says marine insurance group | Insurance Business

Major vessel casualties on the rise, says marine insurance group
The shipping industry has seen an increase in major vessel casualties for 2016, the second year in a row, according to a report by the International Union of Marine Insurance (IUMI).
 
Major vessel casualties had been on a decline in the years prior to 2015, but, for that year, a sharp upturn was recorded, which continued further into 2016, said IUMI.
 
However, total vessel losses continued to decrease, with the decline in claims frequency being offset by the higher average cost of claims.
 
According to IUMI, this trend is due to “accumulation losses” due to the increasing size of container ships. As vessels become larger and capable of carrying more cargo, insurance risk becomes more concentrated with more cargo being lost per accident.

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For example, the latest generation of container ships can carry as much as 20,000 TEUs, with cargo value of around US$985 million. This is much larger compared to older vessels, such as the MSC Flaminia, which suffered a fire in 2012 with US$115 million in cargo on board.
 
IUMI used the 2015 explosion at Tianjin port in China to illustrate the growing risk of accumulation as ships and ports become bigger. The value of the cargo loaded on to the 754 ships in the port on the day of the accident was estimated to exceed US$53 billion.

“Accumulation risk in ports, particularly Chinese ports, was thought to be even greater,” said the report. “It was estimated that the value of cargo throughput at Shanghai could reach US$1.6 billion a day, Shenzhen US$681 million and Tianjin US$477 million.”


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