Large shipping losses are now at their lowest level this century having
declined by over 50% year-on-year, according to Allianz
Global Corporate & Specialty SE’s (AGCS) Safety
& Shipping Review 2019. The annual study analyzes reported
shipping losses over 100 gross tons (GT).
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2018 saw nearly 2,700 shipping incidents, but total losses are at their lowest this century: Allianz (Graphic: Business Wire)
In 2018, 46
total losses of vessels were reported around the shipping world,
down from 98 losses 12 months earlier, driven by a significant decline
in activity in the global loss hotspot, South East Asia, and
weather-related losses (10) halving after quieter hurricane and typhoon
seasons.
While this plummet in total losses is encouraging, the number of
reported shipping incidents overall (2,698 in 2018) shows little decline
– less than 1% year-on-year. Machinery damage is the major cause,
accounting for more than a third of the 26,000+ incidents over the past
decade – twice as many as the next highest cause, collision. Machinery
damage is one of the most expensive causes of marine insurance claims,
accounting for US $1bn+ in five years1.
“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,”
says Baptiste Ossena, Global Product Leader Hull & Marine
Liabilities, AGCS. “Improved ship design, technology, tighter
regulation and more robust safety management systems on vessels have
also helped to prevent breakdowns and accidents from turning into major
losses. However, the lack of an overall fall in shipping incidents,
heightened political risks to vessel security, complying with 2020
emissions rules and the growing number of fires on board bring
challenges.”
Worst accident locations and common causes of loss
The South China, Indochina, Indonesia and Philippines maritime region
remains the top loss location. One in four occurred here in 2018 (12),
although this is significantly down from 29 a year earlier. The East
Mediterranean and Black Sea (6) and the British Isles (4) rank second
and third. Despite signs of improvement, Asia will remain a hotspot for
marine claims due to its high level of trade, busy shipping routes and
older fleets. However, newer infrastructure, better port operations and
more up-to-date navigation tools will help to address challenges.
Cargo
ships (15) accounted for a third of vessels lost around the world in
the past year. The most common cause of ship losses remains foundering
(sinking), which has accounted for more than half (551) of the 1,036
lost over the past decade. In 2018, 30 cases were reported.
Fires
continue to generate large losses on board with the number of reported
incidents (174) trending upwards. This has continued through 2019 with a
number of recent problems on container ships and three significant
events on car carriers. Misdeclared cargo, including incorrect
labelling/packaging of dangerous goods is believed to be behind a number
of fires at sea. Meanwhile, the loss of hundreds of containers over
board from a large vessel in early 2019 provides a reminder that damaged
goods is the most frequent generator of marine insurance claims,
accounting for one in five over five years1.
Emissions compliance brings challenges
Regulation limiting sulphur oxide emissions from January 2020 is likely
to be a game-
changer for the shipping industry, with wide-ranging implications
for cost, compliance and crew. Large ports globally are even considering
deploying so called “sniffer drones” to detect environmental
rule-breakers – ships not using more expensive low-sulphur fuels may
face significant penalties.
Security threats evolve and challenge
Political
risk has heightened around the globe and increasingly poses a threat
to shipping security, trade and supply chains through conflicts,
territorial disputes, cyber-attacks, sanctions, piracy and even
sabotage, as evidenced by recent attacks on oil tankers in the Middle
East. The growing number of migrants at sea and an increase in stowaways
on commercial vessels also has serious consequences for ship owners,
leading to delays, diversions and pressure on crew. Piracy incidents
increased in 2018 to more than 200 – Nigeria is now the top global
hotspot.
Other risk topics in the AGCS Safety and Shipping Review include:
-
The growing number of incidents on larger vessels is concerning.
Container-carrying capacity has almost doubled over a decade and a
worst case loss scenario could cost as much as US $4bn in the future. -
Trusting technology: Safety-enhancing technology in shipping
has been a positive for safety and claims, yet accidents continue to
happen due to overreliance – even down to losses occurring from crew
being on phones. -
Autonomous shipping makes waves: Progress continues to be made
but technology is not a panacea if the root cause of incidents and
losses is not addressed. -
All at sea – The most accident-prone vessels of the last year
are three Greek Island ferries, all of which were involved in eight
different incidents.
AGCS provides global marine and shipping insurance for all types of
marine risk, from single vessels and shipments to the most complex
fleets and multinational logistics businesses. The Marine
Line of Business contributed 11% to AGCS overall premium volume of
EUR 8.2bn in 2018.
About Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty (AGCS) is a leading global
corporate insurance carrier and a key business unit of Allianz Group. We
provide risk consultancy, Property-Casualty insurance solutions and
alternative risk transfer for a wide spectrum of commercial, corporate
and specialty risks across 12 dedicated lines of business.
Our customers are as diverse as business can be, ranging from Fortune
Global 500 companies to small businesses, and private individuals. Among
them are not only the world’s largest consumer brands, tech companies
and the global aviation and shipping industry, but also wineries,
satellite operators or Hollywood film productions. They all look to AGCS
for smart answers to their largest and most complex risks in a dynamic,
multinational business environment and trust us to deliver an
outstanding claims experience.
Worldwide, AGCS operates with its own teams in 34 countries and through
the Allianz Group network and partners in over 200 countries and
territories, employing over 4,400 people. As one of the largest
Property-Casualty units of Allianz Group, we are backed by strong and
stable financial ratings. In 2018, AGCS generated a total of €8.2
billion gross premium globally.
For more information please visit http://www.agcs.allianz.com/
or follow us on Twitter @AGCS_Insurance and LinkedIn.
Cautionary
Note Regarding Forward-Looking Statements
____________________
1 Based on analysis of 230,961
marine insurance industry claims featuring AGCS and other insurers
between July 2013 and July 2018
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