Shipowners at risk of losing insurance cover
Shipowners could find that their vessels are deemed unseaworthy and their insurance cover is affected by failing to comply with more stringent sulphur emissions (SOx) regulations, according to insurance broker Marsh.
The International Maritime Organisation (IMO) is introducing measures to reduce the sulphur footprint of commercial shipping vessels. Under Annex VI of the IMO’s International Convention for the Prevention of Pollution from Ships (MARPOL), the global cap on sulphur emissions will be reduced on Jan.1, 2020 from the current 3.5 percent to 0.5 percent.
Shipowners should not assume that insurance cover will continue to remain in place following a breach of the MARPOL Convention Annex VI after Jan. 1, 2020, according to Marsh’s report titled “Emissions Regulations: Concerns for the Marine Industry”.
The failure to comply with international conventions, and consequently losing flag state convention certification, could affect the validity of a shipowner’s insurance cover if they continue to operate without prior insurer consent, the report says.
“As 1 January, 2020 approaches, Marsh envisages large numbers of vessels seeking to book space in repair yards for the installation of new equipment or conversion to LNG in an effort to comply with the MARPOL requirements,“ said Marcus Baker, chairman of Marsh’s global marine practice.
“Latecomers may find that convenient or preferred yards have no room and, being unable to comply with the new sulphur cap rules by 2020, may risk their vessels becoming non-compliant, which could have ramifications for their insurance provision. Shipowners should act early to ensure any modifications that are required can be carried out in good time,” Baker noted.