Insurance Jottings
Oil Leak from Cargo Ship Pollutes Mauritius Beaches as Insurers Assess Liability
The oil clean-up from a leaking cargo ship which ran aground off the coast of Mauritius continues while the government and insurance firms begin probing liability for the accident.
The incident has befouled the white-sand beaches of the Mauritian coast and left the Indian Ocean island nation facing widespread pollution. Its economy, which relies heavily on tourism, is already reeling from the coronavirus fallout and may be further affected by the spill.
The 300-metre-long vessel Wakashio was en route to Brazil from China when it ran ashore off the south-eastern coast of the island of Mauritius on the 25th July. One of its five fuel oil tanks, holding about 1,180 tons, ruptured a week later, resulting in more than 1,000 tons of fuel leaking into the ocean.
Japan P&I Club, which provided insurance for the ship’s owner, Nagashiki Shipping Company, said on the 11th August that it’s investigating the extent of its coverage. The insurance will cover removal of the ship, as well as clean-up and other legal liabilities related to the owner, according to Japan P&I spokesman Koichi Miyahiro.
Mitsui O S K Lines Ltd, which chartered the vessel, may be ordered by a local court to pay for environmental damages, said Tokai Tokyo Securities analyst Kenji Kanai.
However, as a shipping insurance may cover these potential damages, “an impact on Mitsui O S K would not be big,” Kanai added. MOL, as the company is known, slipped as much as 5.1% in Tokyo on the 11th August.
Beirut governor: economic losses up to US$15 billion
The major global reinsurers, including Europe’s ‘big four’, are likely to take a significant portion of the losses that do emerge, with marine and cargo lines expected to be among the most impacted.
It will take some time before a reliable estimate of insured losses emerges. Beirut’s governor, Marwan Abboud, has said economic losses following the devastating blast in Lebanon’s capital city may reach up to US$10 to US$15bn, including both direct and indirect losses related to business.
It is not at this stage expected that the property facultative market will see meaningful losses, although some excess facultative cover may have been placed above certain cargo limits.
The blast will add to an already large industry loss bill in 2020, which has been dominated by claims associated with Covid-19.
Marine Insurance Losses Likely to Be Under US$250 million from Beirut Port Blast
Insurance claims for damage to ships, goods and the port itself after a warehouse explosion last week in the port of Beirut were likely to total less than US$250 million, reinsurance broker Guy Carpenter said on the 10th August.
Overall insured losses – including property damage – from the port warehouse detonation of more than 2,000 tonnes of ammonium nitrate on the 4th August may reach around US$3 billion, sources told Reuters.
The explosion killed at least 163 people, injured more than 6,000 and destroyed swathes of the Mediterranean capital.
Guy Carpenter said its vessel tracking data showed ten vessels were within 1.6 kilometres of the blast.
“We expect those vessels would have incurred damages,” the broker said in a report.
“Many other vessels were within a radius where sporadic damage may have occurred.”
There was still “substantial uncertainty” around insured losses, but early analysis suggested hull, cargo and port facility losses of less than US$250 million, Guy Carpenter said.
While insurance penetration in Lebanon is low, commercial and industrial properties near the port were likely covered by international insurers, Guy Carpenter said.
Other industry sources also say most of the insurance losses would likely relate to wider property damage in Beirut.
US insurer Liberty Mutual said it expected claims of between US$25 million and US$50 million from the blast, without giving details of the types of cover affected.
AXA XL, AXA’s commercial property and casualty insurance unit, said it had exposure in Lebanon but it and other insurers and reinsurers said it was too soon to give a loss estimate.