Increased Arctic transits worry insurers

Aug 22 2014


The insurance industry has issued a warning about the perceived inadequacies of ships sailing in Arctic waters, especially those involved in the oil and gas sectors.

According to a report published by insurance service provider Marsh, part of the Marsh McLennan group, the rapid development of fledgling Arctic shipping routes is dependent upon improvements in the capabilities of vessels navigating them and the upgrade and expansion of the support facilities in the region.  

‘Arctic Shipping: Navigating the Risks and Opportunities’, stressed that shipping companies need to ensure they have a full understanding of the risks involved in order to gain the confidence of insurers and lists many of the risks involved seen from an insurance perspective. 

Marcus Baker, chairman of Marsh’s Global Marine Practice, commented: “While marine insurers are largely supportive of the development of Arctic shipping routes, they are extremely wary about incurring large, high profile losses while the market is still in its infancy.  

“Currently, the majority of ships and their crews lack adequate experience, are unprepared and the support facilities are not yet in place for full-scale commercial voyages through the Northern Sea Route (NSR) and the Northwest Passage. In the absence of hard facts, it is extremely difficult for marine insurers to price an insurable risk, or even to agree to cover a voyage in the first place,” he said. 

According to Marsh, in considering the provision of marine hull and P&I insurance, insurers and P&I clubs require more detailed information about vessel capabilities and available salvage services, with wreck removal, pollution risks and crew health and safety of major concern to underwriters.  

Steve Harris, senior vice president in Marsh’s Global Marine Practice, added: “The majority of transits that have already taken place in the Arctic were one-off voyages that have been permitted as extraordinary ventures and were usually government-backed or sponsored. 

“Risk presentation is critical. Only if shipping firms can present insurers with the information they require, and all parties concerned take a collaborative approach to calculating these risks, will insurance capacity be readily available to support the growth in Arctic navigation,” he said. 

*Sovcomflot’s 2003-built MR ‘Anichkov Bridge has claimed the distinction of being the first vessel to transit the NSR in the 2014 season, completing her voyage on 18th August.

The Ice class 1A (Arc4) vessel undertook a westbound ballast passage heading for Vysotsk (Gulf of Finland), where she will load oil products for the North Eastern Shipping Co.

Icebreaking assistance was provided by Atomflot’s icebreaker ‘Vaygach’. Ice conditions during the voyage were found to be more severe than it is typical for this time of year.

 



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