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AGCS: Shipping losses at lowest levels this century, but new challenges loom

AGCS: Shipping losses at lowest levels this century, but new challenges loom | Insurance Business

AGCS: Shipping losses at lowest levels this century, but new challenges loom

A new report by Allianz Global Corporate & Specialty SE (AGCS) has revealed that large shipping losses are at their lowest level this century – although there are still emerging risks the industry has to address.

According to the report, entitled the “Safety & Shipping Review 2019,” there were 46 total losses of vessels that were reported around the shipping world in 2018 – down from 98 losses the year earlier. The losses last year were driven by a significant decline in activity in Southeast Asia, considered the global loss hotspot, as well as quieter hurricane and typhoon losses. Weather-related losses only totalled 10 last year.

Despite the decline in losses, the number of reported shipping incidents overall – 2,698 in 2018 – shows little decline; less than 1% year-on-year. Machinery damage was identified as the most common cause of shipping incidents, accounting for more than a third of the incidents. The second most common incident, collision, only had about half of the number of reports of machinery incidents.

Machinery incidents were also identified as the costliest cause of marine insurance claims, accounting for $1 billion in five years.

“Today’s record low total loss activity is certainly influenced by fortunate circumstances in 2018, but it also underlines the culmination of the long-term improvement of safety in the global shipping industry,” said AGCS global product leader hull & marine liabilities Baptiste Ossena.

Ossena noted that innovations such as improved ship design, technology, tighter regulation and more robust safety management systems on vessels have prevented breakdowns and accidents. However, he added that there are still pressing and emerging issues facing the industry.

Those issues identified by the report include:

  • Heightened political risks to vessel security – The increase in political risk has led to conflicts, territorial disputes, cyberattacks, sanctions, piracy, and sabotage, which all pose a threat to shipping security and trade.
  • Complying with 2020 emissions rules – Regulation which comes into effect next year could have wide-ranging implications for the shipping industry, particularly when it comes to cost, compliance, and crew.
  • Fires – Ship fires continue to generate large losses; the number of reported incidents (174) has been trending upwards.