"No evidence at all to suggest a drone" says UKP&I Club

The Ever Given damages claim could be US$1 billion plus

"No evidence at all to suggest a drone" says UKP&I Club


By Daniel Wood

UK P&I Club, the insurer of the container ship that blocked the Suez Canal in March last year, says there is no evidence a drone caused the incident. UKP&I responded to questions from Insurance Business.

“The Flag State (Panama) investigation into the Ever Given Suez Canal grounding is still ongoing,” said the firm in a written statement. “There is no evidence at all to suggest a drone had any part in the incident.”

The London headquartered protection and indemnity insurer covers the liabilities arising from the vessel being stuck. UKP&I has conducted its own examination of the incident. The main, official investigation is the responsibility of the Panama Maritime Authority (Autoridad Maritima De Panama - AMP). Eighteen (18) months later the AMP is yet to file a final report with the International Maritime Authority (IMO).

News reports have said the ship’s operator and Egyptian officials blamed strong winds and a sandstorm for the accident.

However, last week, an Australia-based drone security expert said a reliable intelligence source told him the blockage was caused by a drone attack on the ship.

“With these things there is always a grey area, but I trust the source myself,” said Sydney-based Oleg Vornik, CEO of counter drone technology firm DroneShield.

Vornik described the source as one of his firm’s “key in-country partners.” DroneShield operates in about 100 countries and sells counter drone technology to government agencies and also intelligence and security businesses.

“The version that we heard from our sources was that a drone landed on the control deck of the ship and hacked into networks and demanded, we don’t know the dollar amount of the ransom, but let’s say a million bucks in Bitcoin in the next 24 hours or we’re going to run the ship into the ground,” said Vornik. “The crew of the Ever Given did not comply and so they executed on their threat.”

One result of the ship’s grounding is a massive insurance claim that could reach well above US$1 billion, one of the most expensive ship damages claims in recent history.

IB reached out to the AMP for comment. In an emailed response, Rafael Cigarruista, the AMP’s general director of merchant marine, said he expected their investigation report to be made public “soon” and was therefore unable to provide further comment until then.

The Ever Given’s six-day blockage threw global supply chains into disarray and, according to Lloyd’s List data, held up almost US$10 billion worth of trade.

The BBC has reported that the Suez Canal Authority (SCA) initially asked for more than US$900 million in compensation, including $300 million for a salvage bonus and $300 million for loss of reputation. UK P&I Club rejected that claim and described it as “extraordinarily large” and “largely unsupported”.

When the SCA lowered its claim demand to US$550 million a settlement was agreed, the BBC reported. However, the final settlement has not been revealed.

“Drones are now increasingly used for cyberattacks, where a drone would land on a roof of a building and use proximity to hack into networks,” said Vornik. “I appreciate this may sound like a conspiracy theory, [but] if you have a large commercial ship in this kind of situation blocking the largest canal in the world due to some poor weather and poor skills from the crew it seems like a remarkable coincidence.”

Vornik said drone attacks on shipping “happen all the time”, especially in the Baltic Sea, likely due, he said, to the geographical proximity to Russia where some of these hackers originate from.

The incidents don’t get publicly reported, he said, because the companies involved don’t want the negative publicity.

The investigation into the grounding of the Ever Given faces complex insurance implications.

“Potential claims scenarios are likely from a number of different areas,” said Régis Broudin, Allianz’s global head of marine claims in an article from late March 2021. “Including, for example, any damage caused to infrastructure or claims for obstruction.”

This third party liabilities area is covered by UK P&I Club, he said.

“Liability claims may come from organizations such as the Suez Canal Authority for loss of revenues (and also potential damage to the canal), as well as from other vessels blocked in the area (business interruption/loss of hire, or claims for compensation of cargo delays),” said Broudin.

The final total claims figure may not be known for years.

According to the AMP, it administers the world’s largest registered fleet of flagged vessels. In 2021, more than 8,500 vessels were registered under the Panamanian flag representing about 15% of all flagged ships.

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