Human error is still a major driver of marine incidents and big-data analysis of crew behaviour and near-misses could help prevent disasters, reports Allianz this morning on the release of Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2018. The review analyzes reported shipping losses over 100 gt.
AGCS said in a summary that:
- There were 94 large ships lost worldwide in 2017, down by more than a third over 10 years.
- Bad weather was involved in one in four losses. Losses were up in the accident hotspot of South China and South East Asian waters. Typhoons, traffic and safety on domestic routes were major factors.
- Shipping incidents in Arctic waters increased
- “Megaship” fires, emissions rules, climate change and autonomous shipping posed new risk challenges.
- Insurers expected to see more losses from cyber incidents and technological defects.
- Large shipping losses declined by 38% over the past decade, with this downward trend continuing in 2017.
- However, recent events such as the collision of oil tanker Sanchi and the impact of the NotPetya malware attack on harbour logistics underlined that the shipping sector was currently being tested by both traditional and emerging risk challenges.
There were 94 total losses reported around the shipping world in 2017, down from 98 last year and the second-lowest in 10 years (2014 being the worst in the past 10 years). Bad weather, such as typhoons in Asia and hurricanes in the US, contributed to the loss of more than 20 vessels.
“The decline in frequency and severity of total losses over the past year continues the positive trend of the past decade. Insurance claims have been relatively benign, reflecting improved ship design and the positive effects of risk management policy and safety regulation over time,” said Baptiste Ossena, Global Product Leader Hull & Marine Liabilities, AGCS. But he added a note of caution, saying that “however, as the use of new technologies on board vessels grows, we expect to see changes in the maritime loss environment in future. The number of more technical claims will grow – such as cyber incidents or technological defects – in addition to traditional losses, such as collisions or groundings.”
With 30 losses, almost a third of shipping losses in 2017 occurred in the South China, Indochina, Indonesia and Philippines maritime region, up 25% year on year, and driven by activity in Vietnamese waters. AGCS said that this area had been the major global loss hotspot for the past decade. The major loss factors were weather – six losses from Typhoon Damrey in November 2017 –, busy seas and lower safety standards on some domestic routes.
The East Mediterranean and Black Sea region was the second major loss hotspot with 17 losses, followed by the Atlantic Isles, with eight. There was also a 29% annual increase in reported shipping incidents in Arctic Circle waters (71).
With 53 losses, cargo vessels accounted for more than half of all vessels lost globally in 2017. Fishing and passenger vessel losses were down year-on-year. Bulk carriers accounted for five of the 10 largest reported total losses by GT. The most common cause of global losses remained foundering, with 61 sinkings in 2017. Wrecked/stranded came second with 13 losses, followed by machinery damage/failure with eight losses.
AGCS observed that it was estimated that 75% to 96% of shipping accidents involved human error, which was also behind 75% of 15,000 marine liability insurance industry claims analyzed by AGCS – costing $1.6bn.
“Human error continues to be a major driver of incidents,” said Captain Rahul Khanna, Global Head of Marine Risk Consulting, AGCS. “Inadequate shore-side support and commercial pressures have an important role to play in maritime safety and risk exposure. Tight schedules can have a detrimental impact on safety culture and decision-making.”
Better use of data and analytics could help. The shipping industry produced a lot of data but could utilize it better, producing real-time findings and alerts, Khanna said. “By analyzing data 24/7 we can gain new insights from crew behavior and near-misses that can identify trends. The shipping industry has learned from losses in the past but predictive analysis could be the difference between a safe voyage and a disaster.”
Cyber incidents, of which the global NotPetya malware event was the highest profiled last year, were a wake-up call for the shipping sector. Many operators previously thought themselves isolated from this threat. “As technology on board increases, so do the potential risks,” said Khanna. At the same time, new European Union laws such as the Network and Information Security Directive (NIS) would exacerbate the fall-out from any future failure – be it malicious or accidental. “The current lack of incident reporting masks the true picture when it comes to cyber risk in the marine industry,” said Khanna, concluding that “the NIS directive will bring more transparency around the scale of the problem.”
IMN will be covering the report in more detail over the coming days, looking at risk topics identified in the review that include:
- Container ship fires
- Climate change bringing new route risks
- New emissions rules
- Autonomous shipping and drones
AGCS is the Allianz Group’s dedicated carrier for corporate and specialty insurance business.