Marine insurance ever more dogged by cargo fire, now up to 18% of claims
Cargo damage from onboard fire and explosions are the costliest marine claims, driven higher by inflation, ever-pricier cargoes and a swath of factors driving shipping constraints, Allianz’s global specialty insurance wing AGCS said in a report.
“The number of fires on board large vessels has increased significantly in recent years, with a string of incidents involving cargo, which can easily lead to the total loss of a vessel or environmental damage,” said Régis Broudin, global head of marine claims at AGCS.
Fires accounted for €1.65 billion, or 18% of the €9.2 billion in 240,000 marine claims studied by AGCS from 2017 through 2021. That was up from 13% in the five-year period through mid-2018.
Mis-declaration/non-declaration of dangerous cargoes is one factor to blame. A recent increase in engine room fires “may reveal some underlying risk around crew competencies,” AGCS authors added. Transport of lithium-ion batteries has delivered incidents and adds to concerns.
The industry move to ever-larger ships, the largest of which can now carry 20,000 containers, plus the global economy’s move to ever more expensive goods, puts larger sums at risk. AGCS cites single container valuations at $50 million or more for high-value pharmaceuticals. Then start adding in 2022’s double digit inflation.
Measured by claims frequency, damaged cargo is the top cause of marine insurance claims and the third largest by value, AGCS data indicated. Physical damage remains the top cause, but is being chased by theft and temperature variation claims, particularly prevalent for pharmaceuticals.
Sources of disruption continue to increase, authors insisted. Maritime incidents, natural catastrophes, labour shortfalls, constrained container capacity, cyber-attacks, the Covid-19 pandemic and the Russian invasion of Ukraine have all brought major delays to shipping and ports.
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