Cargo, container ships and ro-ro vessels

drive large losses

While major losses have trended down, attritional losses are becoming more of a pressing issue for insurers – as evidenced by a 5% year-on-year increase in the number of casualties/incidents (see page 17) – in part due to the increased complexity of claims.

“A claim can take on a life of its own,” says Captain Andrew Kinsey, Senior Marine Risk Consultant at AGCS. “Litigation, particularly in the US, can drag on for a long time, while any environmental issues can have a long tail and add significantly to the overall cost of a claim. Big claims happen, and that is why we have insurance. But it’s the little losses that eat your lunch. That is why insurers need to address the issue of loss control.”

The frequency and severity of container ship fires is at an all-time high. There were 40 cargo-related fires in 20191, or one every 10 days on average. However, many smaller fires and near misses are going unreported, meaning the actual number is likely to be much higher.

The unprecedented reporting of container ship fires in 2019 continued into 2020 with the incident on board the 10,062 teu Cosco Pacific in January 2020. Fortunately, the fire was contained, but other vessels have not been so lucky. The Yantian Express, APL Vancouver and Maersk Honam all suffered major fires in the past three years.

The size of container ships has increased exponentially over the past 50 years. Vessels have almost tripled in size, while capacity has increased from around 1,500 teu in 1970 to more than 24,000 teu today. In contrast, crew numbers have decreased by around a quarter while the average number of firefighting hoses has only increased from one to two [3].

According to Rahul Khanna, Global Head of Marine Risk Consulting at AGCS, current regulations have not kept pace with the growth of the vessels, or the challenge of fighting larger and more dangerous fires. Regulatory modernization is urgently needed to ensure container vessels are sustainable and safe, says Khanna.

Khanna has been part of an industry working group organized by the International Union of Marine Insurance (IUMI) calling for a regulatory review of technical requirements for fire detection and fire response. In February 2020, IUMI and co-sponsors, including the German and Bahamian flag states, the Baltic and International Maritime Council (BIMCO) and CESA, which represents the shipbuilding industry in Europe, submitted a paper to the International Maritime Organization’s (IMO) Maritime Safety Committee proposing amendments to the International Convention for the Safety of Life at Sea (SOLAS). The proposals include provisions for early fire detection and effective control of fires in containerized cargo stowed below and on deck.

“Should IUMI’s proposals be adopted by the IMO it would significantly enhance fire protection in cargo ships and therefore protect vessels, cargo and crew in the future. Failure to adequately address this issue will likely result in a growing number and severity of container ship fires, one of the major causes of large losses and an issue of ongoing concern for the industry,” warns Khanna.

Major incidents like the fires on the Maersk Honam and Yantian Express have shown crew are often not able to respond quickly and safely enough to a fire. Fire and smoke detectors are typically too slow to react, meaning fires are often too advanced to send people to the scene. The flag state incident report into the 2019 fire on the Yantian Express found the fire was only detected after two containers were already fully ablaze.

Technology could substantially reduce the risk of fire, including temperature monitoring of cargo, water spray and CO2 fire suppression in cargo holds, as well as more active firefighting on deck, including water curtains, water screens and fixed water monitors. Development of drone technology could also play a key role in the containment and control of offshore vessel fires in future, with projects involving a fire suppression system that can be integrated within a drone already in the offing, says Captain Andrew Kinsey, Senior Marine Risk Consultant at AGCS.