Shipping industry battling with potential risks from new IMO rules

Shipping industry battling with potential risks from new IMO rules | Insurance Business

Shipping industry battling with potential risks from new IMO rules

The global container shipping industry is grappling with potential risks from new rules that aim to reduce marine pollution.

New rules from the International Marine Organisation (IMO) have given shipowners a January 01 deadline to either switch to low-sulphur fuel or install devices known as “scrubbers” in a bid to reduce global sulphur emissions.

However, industry figures have voiced concerns about the potential risks of both options – including sudden fires or collisions due to engine failure and liability for inadvertently breaching the rules. And with the industry needing to invest an estimated US$10 billion to adhere to the new rules, analysts say there may be reason for the concern.

Several large ship owners have told Reuters that handling the new fuels correctly and making sure the scrubbers are properly deployed would minimise danger, but that if care was not taken, problems could arise.

“The big guys are going to be serviced by the right people… there is bigger risk for the smaller ships,” Hugo De Stoop, chief executive of Belgian tanker operator Euronav, told Reuters.

Problems linked to certain types of scrubbers in particular have alarmed some shipowners, and insurers have reported cases of fires and corrosion with these devices.  What’s more, if corrosion was legally deemed to be inevitable, underwriters might try to deny related claims, according to Stephen Harris, senior vice president with insurance broker Marsh.

“Whether underwriters adopt this line or not could depend on how frequent and how big the problem becomes next year,” Harris told Reuters.

Harris also said that the problems made assessing cover a challenge.

“Is it non-compliance? The question marks are bigger than the answers,” he told Reuters.