Arctic headache for ship insurers as routes open up | Reuters
▻https://www.reuters.com/article/climate-change-arctic-shipping-insurance-idUSKBN27C1VZ
FILE PHOTO: Greenpeace’s Arctic Sunrise ship navigates through floating ice in the Arctic Ocean, September 15, 2020. Picture taken September 15, 2020. Picture taken with a drone.
REUTERS/Natalie Thomas/File Photo
Double the manpower is needed to navigate. Lookout shifts are kept to just one hour, so sailors don’t lose concentration and miss a mass of floating ice. Big icebergs show up on radar, but smaller, truck-sized “bergy bits” - even more dangerous - can be missed, the captain says.
The cold can freeze equipment and the earth’s magnetic field disrupts compasses. If anything goes wrong, “you are so far away from help,” said Whatley, 31, who sails through Arctic and Antarctic waters for the British Antarctic Survey.
As climate change opens new sea routes, experienced polar captains like Whatley are coveted for Arctic voyages that can save money on the run between Europe and Asia. But as activity in the Arctic’s waters picks up, insurance companies are grappling with a fundamental question: If something goes wrong, who pays?
So far, it’s unclear that the cost of a major accident would be completely covered by insurance. Damages from a ship spilling oil, hitting an iceberg or becoming marooned can run into the hundreds of millions of dollars.
“It’s all very much new territory,” said Helle Hammer, chair of the policy forum with the International Union of Marine Insurance (IUMI), the leading association for the global marine insurance market. Without years worth of data on the number of casualties, accidents, collisions or oil spills, she said, “it’s impossible to do the risk modelling.”
More than 10 insurance companies or brokers interviewed by Reuters said they still had too little knowledge of the region to resolve all questions about liability.
In the past few years, marine insurers in general have been paying out more for ship damage than they collected in premiums, according to IUMI data. Brokers say some are pulling out of the market completely. So the appetite to underwrite risks in the Arctic market is not high.
It’s “not like the rest of the world, with tried and tested shipping routes and known risks,” said Michael Kingston, an Arctic marine consultant and adviser to the Arctic Council, an intergovernmental forum on Arctic affairs.
For insurers that do contemplate new ice routes, there is a dramatic precedent: The Titanic, which hit an iceberg and went down in the freezing waters of the North Atlantic in April 1912. The loss was as devastating then as more recent catastrophes like Hurricane Katrina have been since, leading global insurance market Lloyd’s of London says.