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Home News Allianz expects pandemic to result in rise in machinery issues

Allianz expects pandemic to result in rise in machinery issues

Maintenance issues and cargo fires are among the most significant risks for cargo vessels in this period of the pandemic, according to insurance company Allianz.

As the Covid-19 virus has spread around the globe restrictions on travel and the closure of maintenance yards has increased the risk of insurance claims for machinery said the insurer.

In its latest bulletin Allianz points to a 70% decline in ship losses over the last decade, for vessels over 100gt, with just 41 ships lost in 2019. However, the number of incidents has increased to 2,815 in the same year. That amounted to a 4.7% increase, from 2,688, on the previous year with ro-ro vessel safety “a growing concern”, said the insurer.

“We cannot lose sight of the fact that, while total losses have reduced significantly, the total number of incidents increased year-on-year,” said Baptiste Ossena, Global Product Leader Hull Insurance, AGCS. “It does not take much for a serious incident to result in a total loss and, hence, the warning signs are there.”

Allianz said that vessel owners faced additional cost pressures as a result of the economic crisis caused by the pandemic.

That prompted Captain Rahul Khanna, Global Head of Marine Risk Consulting at AGCS to point out that, “We know from past downturns that crew and maintenance budgets are among the first areas that can be cut, and this can impact the safe operations of vessels and machinery, potentially causing damage or breakdown, which in turn can lead to groundings or collisions. It is crucial that safety and maintenance standards are not impacted by any downturn.”

In addition to the increasing maintenance concerns rising geopolitical tensions, new emissions regulations, piracy and mis-declared cargo and fire incidents continue to pose significant risks.

According to Allianz there were almost 200 reported fires on vessels over the past year, up 13%, with five total losses in 2019 alone. A situation that has been extensively covered on Container News.

Issues with ro-ro vessels remain among the biggest safety issues. Total losses involving ro-ros are up year-on-year, as well as smaller incidents (up by 20%) – a trend continuing through 2020.

“The rise in number and severity of claims on ro-ro vessels is concerning. Ro-ros can be more exposed to fire and stability issues than other vessels,” says Khanna. “Many have quick turnarounds in port and a number of accident investigations have revealed that pre-sail away stability checks were either not carried out as required, or were based on inaccurate cargo information. Too many times commercial considerations have endangered vessels and crews and it is vital that this is addressed on shore and on board.”

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