- Allianz Safety & Shipping Review 2017: 85 large ships lost worldwide in 2016, down 50% over a decade. South China and Southeast Asian waters top loss location. East Mediterranean replaces British Isles as top incident hotspot
- Crew negligence, inadequate vessel maintenance and cyber increasing areas of concern, as economic pressures challenge budgets
- New navigational and monitoring technologies could help reduce impact of human error – which has resulted in $1.6bn of losses in five years. However, over-reliance brings risks
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Large shipping losses have declined by 50% over the past decade, largely driven by development of a more robust safety environment by ship-owners, according to Allianz Global Corporate & Specialty SE’s (AGCS) fifth annual Safety & Shipping Review 2017.
There were 85 total losses reported around the shipping world in 2016, down 16% compared with a year earlier (101). Last year set safety records in the sector with the lowest number of losses in the past 10 years, preliminary figures show. The number of shipping incidents (casualties) also declined slightly year-on-year, by 4% with 2,611 reported, according to the review, which analyzes reported
shipping losses over 100 gross tons.
More than a quarter of shipping losses in 2016 (23) occurred in the South China, Indochina, Indonesia and Philippines region – the top hotspot for the last decade. Loss activity remained stable but was still almost double the East Mediterranean and Black Sea region (12), which was the next highest. Loss activity was up in the Japan, Korea and North China; East African Coast; South Atlantic and East
Coast South America; and Canadian Arctic and Alaska maritime regions.
Cargo vessels (30) accounted for more than a third of all vessels lost. Passenger ferry losses increased slightly (8), driven by activity in the Mediterranean and South East Asia. Standards remain an issue in some parts of Asia with bad weather, poor maintenance, weak enforcement of regulations and overcrowding contributing to loss activity.
After Hanjin – economic pressures continue to bite
Technology drives safety improvements but over-reliance presents risk challenges
Safety-enhancing technology is already impacting shipping – from electronic navigational tools through to shore-based monitoring of machinery and even crew welfare. Technology has the potential to significantly reduce both the impact of human error – which AGCS analysis shows accounted for approximately 75% of the value of almost 15,000 marine liability insurance claims over five years;
equivalent to over $1.6bn – and machinery breakdown.
For example, telematics are already successfully deployed in the automotive sector, improving driver behavior. The shipping sector could also benefit. Insurers such as AGCS are in the early stages of working with ship-owners to utilize Voyage Data Recorder (VDR) analysis to improve safety.
Technology can also be used to improve crew welfare. For example, offshore health problems can often be difficult to address due to location. In response, AGCS, together with Allianz Worldwide Care and Allianz Global Assistance, is now offering crew 24/7 access to medical advice through a dedicated app and on-board equipment. “Such innovative ‘telemedicine’ assistance services can help vessels to make more informed decisions about a crew member’s health, potentially reducing the need to make costly route deviations,” says Ossena.
The threat of cyber-attacks continues to be significant. Most attacks to date have been aimed at breaching corporate security rather than taking control of a vessel. “The shipping sector doesn’t have a particularly heightened risk awareness when it comes to cyber. As no major incident due to a cyberattack has taken place yet, many in the industry are still complacent about the risks,” says Khanna. As many as 80% of offshore security breaches are estimated to be down to human error. “IT security should not be put on the backburner. If hackers were able to take control of a large container ship on a strategically important route they could block transits for a long period of time, causing significant economic damage.”
Other risk topics identified in the review include:
- Structural integrity of vessels: This remains an issue in the wake of a number of incidents and losses resulting from breaches in recent years, particularly concerning vessels that have been converted.
- Fires at sea: The recent number of fires on container ships has raised questions about whether safety systems have kept pace with vessel size. Inaccurately labelled cargo can exacerbate the issue.
- The potential for a $4bn loss: Larger vessels, the rising cost of wreck removal, environmental sensitivities and greater liability and regulation means such a scenario may no longer be unlikely.
- Autonomous shipping could be operating on fixed regional routes in the near future. Safety considerations will be crucial to development with concerns about collisions and challenges around regulatory and liability issues.
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About Allianz Global Corporate & Specialty
Allianz Global Corporate & Specialty (AGCS) is a leading global corporate insurance carrier and a key business unit of Allianz Group. AGCS provides risk consultancy, Property-Casualty insurance solutions and alternative risk transfer for a wide spectrum of commercial, corporate and specialty risks across 12 dedicated lines of business.
Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses, and private individuals. Among them are the world’s largest consumer brands, tech companies and the global aviation and shipping industry, but also wineries, satellite operators or Hollywood film actors. They all look to AGCS for smart answers to their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding claims experience.
We constantly strive to deliver the best for our customers through our global team of around 4,400 employees from over 70 nationalities in 34 countries worldwide. As the one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable financial strength ratings and a global network in over 200 countries and territories. In 2018, AGCS generated a total of €8.2 billion gross premium worldwide.
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