February 3 - The International Union of Marine Insurance (IUMI) said that insured losses resulting from last year's explosion at Tianjin Port are likely to amount to USD5-6 billion.
Speaking at the body's winter conference in London on February 2, Patrizia Kern-Ferretti of the IUMI Facts & Figures Committee said the incident is the largest man-made loss to ever occur in Asia, and will be the largest marine insurance loss in history.
The disaster, in which 173 people were killed and 800 injured, has presented a number of unprecedented challenges for claims assessment. An inability to access the affected area has meant insurers and adjusters have been unable to fully assess the extent of the damage. Subsequent clean up operations have also eliminated the possibility to conduct a formal loss adjustment process within the exclusion zone.
As many as 68,000 new motor vehicles parked at the port have been written off - the gateway accounts for 40 percent of all Chinese automotive imports and exports, as well being a huge industrial and petrochemical complex.
It has thrown the topic of accumulation risk into stark perspective. "Ports, warehouses and cargo storage spaces are among the locations with the greatest accumulation potential," Kern-Ferretti highlighted.
The ro-ro shipping sector also came under close scrutiny. "A worrying issue for us is one that happened last week - the accident of the Modern Express," explained IUMI president Dieter Berg. The car carrier got into trouble off the French coast.
"Unfortunately, it was just one year ago that we talking about a similar situation, the accident of the Höegh Osaka," he added. The ro-ro vessel operated by Höegh Autoliners was grounded outside the Port of Southampton after developing a list.
"This is a recurring loss we see. We have seen a number of losses in 2014, 2012, 2006 and 2002. We see regular accidents with these ro-ro ships. The Modern Express was loaded with heavy machinery and timber," he stated.
Berg said that car carriers have certain structural issues, stability problems and that ballast water is an issue; if water gets on board "you are in big trouble". Ro-ro vessels do not have bulk compartments - in order to facilitate quick loading and unloading operations - and if water gets aboard "there is no way to stop it". IUMI said this issue would be discussed at an upcoming workshop.
The lifting of Iranian sanctions was also discussed, with the differing stances of the USA and European Union (EU) a cause for concern. Europe has lifted most of its sanctions and embargoes against Iran through a general approach, which in principle allows business transactions to commence.
The USA, however, has only lifted sanctions for non-US persons. Embargoes are in place for US insurance and re-insurance companies - any trade between the US and Iran is forbidden unless authorised by the OFAC (Office of Foreign Asset Control).
Given the OFAC and EU's new scope of sanctions, those involved in international insurance, shipping, trade and marine activities will need to take an open approach to Iranian risk.
IUMI warned that insurers should remain cautious with their internal compliance processes to ensure they do not breach the new sanctions regime. The use of a sanctions clause when doing business in Iran will remain a contractual requirement in order to comply with these regulations.