Marine insurers still face considerable exposure to risks associated with the coronavirus pandemic, according to Allianz Global Corporate and Specialty (AGCS).
Although these claims have largely fallen on protection and indemnity insurers, hull and machinery and other marine sectors could still find themselves affected by the fallout, according to AGCS' analysis in its Safety & Shipping Review 2021.
Covid-19 infections and prevention measures have already impacted the mounting cost of wreck removal work of the 7,700-ceu car carrier Golden Ray (built 2017) at the US port of Brunswick, AGCS pointed out.
And there could be problems related to the dramatic rebound in the containership market.
AGCS said that market recovery comes at a time when hundreds of thousands of crews have worked at sea beyond their contracted period and, in many cases, beyond the maximum 11 months allowed under the Maritime Labour Convention 2006.
Recruitment could be a problem because cadets' training programmes have been affected, while the pandemic has damaged the image of the seafaring profession.
“Shipping is likely to experience a surge in demand as the economy and international trade rebounds with vaccinations,” said senior marine risk consultant Andrew Kinsey. “However, many crews are fatigued and have been under immense strain from Covid-19 for over a year. Potentially, we could see a shortage of seamen if the industry struggles to retain or recruit.”
Fatigue and stress experienced by seafarers could also impact their ability to carry out maintenance and repairs, which could again lead to casualties and increased claims costs.
AGCS also sees potential for the global logistics problems caused by the pandemic to start to affect insurance costs.
Labour supply issues and problems sourcing machinery are delaying repairs at shipyards, which has a direct impact on the cost of hull and machinery claims.
AGCS said there have been delays in the manufacture and delivery of spare parts, as well as a shortage of space at yards.
“Covid-19 has created an environment of elevated risk for the shipping industry, which is having to operate under very difficult circumstances,” said AGCS senior marine risk consultant Nitin Chopra.
“Covid-19 measures at ports, crew fatigue, disruption to maritime supply chains, surges in demand for shipping and the increased use of virtual pilots can all affect exposures.”
