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Shipping losses decline but cyber security looms - Allianz

Source: Asia Insurance Review | Jul 2017

Global Cyber Marine

There were 85 large ships lost worldwide in 2016, a decline of 50% over the past decade, said the Allianz Safety & Shipping Review 2017, a report published by Allianz Global Corporate & Specialty SE (AGCS). The review also noted the South China and Southeast Asian waters as top loss location, with East Mediterranean replacing the British Isles as the top incident hotspot.
   The decline in losses are largely driven by development of a more robust safety environment by ship-owners. The number of shipping incidents also declined slightly year-on-year, according to the review, which analyses reported shipping losses over 100 gross tons. The 2,611 incidents reported in 2016 represents a 4% decline.
   “While the long-term downward loss trend is encouraging, there can be no room for complacency,” says Baptiste Ossena, Global Product Leader Hull & Marine Liabilities, AGCS. “The shipping sector is being buffeted by a number of interconnected risks at a time of inherent economic challenges.” 
“Perfect storm” 
Further, environmental scrutiny is increasing with record fines for vessel pollution. New ballast water management rules that come into force in 2017 are welcomed, but the cost of complying could have a significant impact on already-stressed shippers. Political risk is increasing, with activity in hotspots such as Yemen and the South China Sea having the potential to affect vessel routes. The threat of offshore cyber-attacks is also significant. “A ‘perfect storm’ of increasing regulatory pressure combined with narrowing margins and new risks is gathering,” says Mr Ossena.
   The most common cause of global shipping losses remains foundering (sinking), accounting for over half of all losses in 2016, with bad weather often a factor. Meanwhile, over a third of shipping casualties during 2016 were caused by machinery damage.
   Other significant risks include crew negligence, inadequate vessel maintenance and cyber, as economic pressures challenge budgets. While new navigational and monitoring technologies could help reduce impact of human error – resulting in US$1.6 billion of losses in five years, over-reliance brings risks of its own, said the report. A 
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