Allianz: Dangers on the Rise despite Record Low Total Losses.

According to the Allianz Global Corporate & Specialty’s Safety & Shipping Review 2023, the overall number of shipping incidents and casualties remained steady throughout 2022, even though the figure for shipping losses reached a record low. Despite the progress made in the reduction of shipping losses over the past decade, the increasing size of vessels and congestion in and around ports still present challenges for the industry. Additionally, the report highlights issues and concerns related to the growing shadow fleet, hazardous cargo handling, fire and mis-declared cargo, and decarbonization efforts, among others.

Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS, notes that the drop in shipping losses is evidence of the positive impact of safety programs, training, and regulation, though the industry still faces looming challenges. According to the report, there were only 38 total losses of vessels reported in 2022, down from 59 in the previous year. While total losses declined, the number of incidents documented annually, around 3,000, remained constant. Around half of all claims were attributed to machinery damage or failure.

Allianz cites new threats posed by the ongoing Ukraine conflict, which could impact commercial shipping in the Black Sea region. The report also warns of the danger presented by the shadow tanker fleet, which they estimate could have reached as many as 600 vessels. Most of these ships are older and operate under flags with lower maintenance standards, with some sailing without insurance coverage. Among other concerns are the growth in hazardous cargo transport, poor packing, and mis-declaration, all of which contribute to losses and future challenges for the industry.

Allianz’s report highlights an increase in fire incidents, with over 200 reported in 2022, the highest in ten years. Fire incidents accounted for 17% of all incidents documented in the year, and they were the third most common cause of shipping incidents globally. Allianz anticipates that the battery market will grow by 30% annually over the next decade, highlighting the need for purpose-built vessels for transporting electric vehicles. However, the majority of ships lack suitable detection, protection, and firefighting capabilities, increasing concerns about thermal runaway from Li-ion batteries.

The combination of these issues, along with inflationary pressures on global economies, presents insurers with rising expenses. Allianz cautions that vital investments in safety initiatives and decarbonization strategies may be jeopardized by economic pressures. This report and accompanying data intend to inform stakeholders about the challenges facing the shipping industry in the coming years.

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