Climate change ‘could cost marine insurance industry millions’
Marine insurance is one of the oldest types of insurance, dating back to the 12th century when transporters of goods between ports started insuring their cargo against a variety of perils, including weather-related losses. This is still the case today, but a new threat has surfaced in recent years which could potentially cost the marine insurance industry millions – climate change.
“Climate change is one of the most important risks facing the marine insurance industry today. As ambient temperatures rise all over the world, the increasing incidence of extreme weather events associated with climate change has become a global concern, posing challenges to logistics and shipping companies,” says Dave Keeling, Chief Operating Officer at Santam’s Associated Marine, South Africa’s largest marine underwriter.
Keeling says South Africa, especially Cape Town, typically experiences severe winds from time to time, resulting in shipping delays. Last year we also experienced container losses as a result of extreme weather.
In December 2014, empty containers were toppled by strong winds in the container terminal in Durban Harbour, which had an impact on the shipping schedule as it resulted in delays. Another incident took place in Port Elizabeth in November last year, when a container ship lost 23 large containers in strong winds. Many of these were not recovered.
“Besides the loss of the cargo and pollution damage to the ,environment, floating containers pose a threat to marine pleasure craft such as yachts and commercial vessels, and also increase the potential for passenger and third-party liability claims to marine insurers,” Keeling says.
He says the increased risks associated with climate change have given rise to a greater need for insurers to re-evaluate the risk associated with maritime shipping, and to invest in technology to detect the risk and develop the underwriting skills and knowledge to mitigate it.
“Ultimately however, shipping companies will themselves have to develop new seafaring technology and find ways of equipping their vessels to better handle the increased frequency and severity of storms,” Keeling concludes.