The shipping industry has largely proved resilient to the coronavirus outbreak, and insurance claims related to risks of the sea could be reduced as fewer vessels venture out, insurer Allianz reports in its Safety and Shipping Review 2020.
However, new challenges have emerged that could lead to more claims.
“One of the biggest issues,” Allianz reports, “has been the inability to change crews easily because of pandemic restrictions.”
Crew relief is essential to ensuring the safety and health of seafarers. Fatigued crew members make errors that Allianz says contribute to 75 percent to 96 percent of marine incidents. Damaged goods and containers account for more than one in five shipping claims.
“The pandemic has heightened the risk environment around high-value and temperature-sensitive goods in particular as supply chains have come under pressure, cargo-handling companies have shut down abruptly, and ports operated under restrictions,” Allianz says.
COVID-19 also has made it hard to obtain parts and materials like lubricants that are essential to maintenance and repair. This could make ships and the equipment on board them less safe, potentially leading to groundings or collisions.
Such an outcome could impede or reverse the industry’s steadily improving safety record.
The number of total losses of large ships fell in 2019 to 41, Allianz reported – “the lowest total this century and a close to 70% fall over 10 years.”
The insurer credits improved ship design, technology, regulation, and risk management as contributing to the long-term reduction in losses.
But improved technology can be a two-edged sword as vessels become more reliant on computers and software, making them vulnerable to cyber incursions. The coronavirus outbreak has affected this risk, too, Allianz says, reporting that companies have faced a 400% increase in attempted cyber-attacks since the pandemic began.