The potential cost of an ultra large containership catching fire was one of the extreme loss scenarios highlighted by outgoing International Union of Marine Insurance (IUMI) president Dieter Berg, as he addressed the organisation's annual conference for the last time.
In his parting comments, he told insurers that they should prepare to “think the unthinkable” at a time when potential claim values and risks are soaring and when there is “strict liability for environmental damage”.
Citing the $6bn cost to insurers of the Deepwater Horizon disaster, the $2bn to $3bn cost of the Tianjin port explosion and the $2bn cost of the Costa Concordia tragedy, he said: “If you look at the losses here, we are already in the range of the unthinkable.”
Nightmare reality
Berge said nightmare casualties could become a reality for marine insurers, warning that a cruiseship and tanker collision could cost insurers $3bn with loss of life, while a disaster involving an offshore floating LNG project could run up a $12bn claim.
He said there are also some emerging areas of cover that are unknown to insurers, such as potential losses from cyber-crime.
The emergence of autonomous shipping is another unknown.
“The question here is will technology cut through the risk of failure,” he said. “Deep-sea mining also involves huge values for equipment that is new technology and comes with new risks."
Environmental change that is bringing extreme weather events is another area for concern, he said, pointing to the Harvey, Irma and Maria typhoons of 2017 that rang up mega losses for the insurance market.
