New casualty prompts IUMI to reiterate concern about “recurring losses” of car carriers
By James Brewer
Roll-on roll-off car carriers are back as a top concern for underwriters after a serious new casualty in rough seas off the coast of France.
Dieter Berg, president of the International Union of Marine Insurance, said after IUMI’s winter 2016 meeting in London that insurers were uneasy about “recurring losses” of such vessels.
The Panamanian-registered Modern Express loaded with heavy machinery and timber and bound for Le Havre had to be taken under tow after experiencing a heavy list 44km off Arcachon near Bordeaux at the end of January. Crew members were evacuated, and a Smit Salvage team boarded the ship by helicopter to secure the difficult tow to Bilbao.
Mr Berg described insurance coverage of such vessels as “a very difficult risk.” Car carriers with their high deck structures were hard to navigate at low tide, and ballast water was an issue. Without bulk compartments there was no way to stop seawater once it got in.
Lars Lange, IUMI secretary-general, said that the organisation was already pursuing this question in discussions at the International Maritime Organization, and with the International Association of Classification Societies.
IUMI plans to examine the issue in one of its workshops at its 2016 conference (September 18-21) in Genoa. Mr Berg said that the theme for the conference will be Effective Underwriting in a Changing Environment.
Exactly a year earlier, at the IUMI winter 2015 meeting, leading members had referred to the problems of safety and stability of pure car carriers after the Hoegh Osaka had three weeks earlier been deliberately grounded following a list that developed in the entrance to Southampton Water. On board were 1, 400 vehicles including 1, 200 luxury models. Nineteen days later the ship was safely towed back to Southampton.
Mr Berg referred to the latest incident as he outlined the challenges facing the industry. He spoke of tough new rules, a very competitive environment and weak interest rates. Global trade was reducing and commodity prices, especially of oil, were under pressure.
On a more positive note, the flow of alternative capital which threatens over- capacity in the insurance market was reducing, as controllers of such capital realised that the margins were getting thinner in insurance.
The IUMI president said it was important to remember the menace of maritime piracy. “If there is a political will to fight against piracy, it works very well, ” he said. “We saw that in the early 2000s when Singapore and Malaysia formed a coalition to fight against pirates. My concern is coming back to the east coast of Africa. At the moment it is quiet, but this is kind of a sleeping base there because we have naval forces there. We have to see if Atlanta [code name of the European Union Naval Force Navfor Somalia operation] will be withdrawn.” The EU has so far extended the mandate until December 2016, but Mr Berg had the feeling that “completely different drivers like Syria, Islamic State and the Mediterranean” might take political priority.
Other developments to come under the microscope at IUMI include new business models, big data, digitalisation, innovation and mergers and acquisitions. Cyber risks will be on the agenda, and it was clear that “intelligent containers” would change completely the logistical environment.
IUMI’s big projects include a global education programme. The strategy is to support the quality of the existing national education marine-related training programmes, run by US, Scandinavian and the London market. Mr Berg said: “What we have in mind is starting with some webinars on a global basis offered by IUMI this year, and we are considering organising another seminar for the Asian market. Our business is moving to Asia, so IUMI will take a closer look at this market.”