Allianz: Asia Pacific remains top shipping loss region despite lowest loss figures globally this century



  • Safety and Shipping Review 2019: Asia Pacific waters remain top shipping loss region, led by South China, Indochina, Indonesia and Philippines
  • While total losses have declined regionally, shipping incidents are on the rise as a result of high traffic
  • Globally, 46 large ships lost in 2018, down by a record 50% annually and 55% below the 10-year-average of 104
  • Challenges for shipping industry: political threats to vessel security; impact of 2020 emissions rules and growing number of fire incidents


SINGAPORE - Media OutReach - 4 June 2019 - Asia Pacific waters remain the top shipping loss region, accounting for 45% of losses globally in 2018, according to Allianz Global Corporate & Specialty SE's (AGCS) Safety & Shipping Review 2019. The annual study analyzes reported shipping losses over 100 gross tons (GT).


In 2018, 21 total losses of vessels were reported in Asia Pacific, down from 46 losses in the 12 months earlier, driven by a significant decline in activity in the global loss hotspot, South East Asia, and weather-related losses after quieter hurricane and typhoon seasons.


While this plummet in total losses is encouraging, the number of reported shipping incidents overall in Asia actually increased by 22% in the past four years, according to analysis of data from 4,000 insured vessels by AGCS[1]. However, this is more due to the sheer volume of ships that pass through the region, rather than below-par safety standards.


"We do typically see more incidents of groundings and collisions in Asia than other locations around the world, but this generally reflects the higher levels of trade and where ship owners are trading," says Tom Taberner, Regional Head of Energy & Marine Asia Pacific at AGCS. "In many cases port infrastructure in Asia is new and there are many new or expanding ports in China, Korea, Japan and Malaysia etc. Newer infrastructure means fewer issues, better port operations and more up-to-date charts, which will address challenges."


Worst accident locations and common causes of loss

Asia Pacific waters remain a hotspot for marine claims with 4 of the top 10 loss regions globally in 2018 and half of the top 10 largest losses also occurring in the region. The South China, Indochina, Indonesia and Philippines maritime region remains the top loss region, where one in four losses globally occurred in 2018 (12). This is however significantly down from 29 a year earlier, marking the first time the region has seen a fall in losses in four years. Other top loss regions in Asia Pacific include Japan, Korea and North China (#4 globally), as well as the Arabian Gulf and approaches (#5).


Cargo ships (8) accounted for more than a third of vessels lost around Asia Pacific in the past year. Foundered (sunk/submerged) was the major cause, accounting for 14 of the 21 losses regionally -- over thrice as many as the next highest cause -- wrecked/stranded. Global results also bear this trend, where foundering (sinking), has accounted for over half (551) of the 1,036 lost globally over the past decade, and are the most expensive cause of loss for insurers, accounting for US $1.56bn in five years[2].


Despite a decline in number of total losses, the frequency and cost of collision, grounding and fire incidents has increased in some locations for Asian based-ship owners and managers. There were 425 collisions or contact incidents during the past 12 months, with the average cost of collision claims highest on containers vessels ($840,000). Overall, collision incidents are the second most frequent cause of claims in the region behind machinery breakdown / engine damage (462 incidents).


Fires also continue to be an issue with 34 reported incidents over four years, at a total cost to the region's insurance sector of almost $50m ($48mn). In particular, there has been an increase in cargo fires on container ships and car carriers, with a number of notable losses in 2018 and 2019. "We have seen a rise in incidents involving car carriers, which are becoming more expensive. This is a major concern with fires on the Auto Banner in May 2018 and most recently the Sincerity Ace in January 2019," says Taberner.


Piracy numbers in the region have also fallen, led by Indonesia which saw a 64% fall of piracy incidents (36) in 2018 over the past five years, and is no longer the top piracy hotspot in the world. However, the South East Asia and Africa regions still account for over three quarters of all piracy incidents worldwide (77% - South East Asia 67 incidents and Africa 87 incidents). Hijacking and boarding of vessels is still tied to inequality and the economic situation in parts of Africa and Asia, meaning global economic and geopolitical continue to play on the security of shipping.


Global trends and evolving compliance and security challenges

Globally, the loss trends are similar to Asia, with 46 large ships lost worldwide in 2018, down from 98 12 months earlier. However, the number of reported shipping incidents overall (2,698 in 2018) shows little decline, less than 1% year-on-year. Just like Asia, machinery damage is a major cause, accounting for more than a third of the 26,000+ incidents over the past decade, and is one of the most expensive causes of marine insurance claims ($1bn+ in five years2).


Looking forward, regulation limiting sulphur oxide emissions from January 2020 is likely to be a game- changer for the shipping industry, with wide-ranging implications for cost, compliance and crew. In addition, political risk has also heightened globally and increasingly poses a threat to shipping security, trade and supply chains through conflicts, territorial disputes, cyber-attacks, sanctions, piracy and even sabotage, as evidenced by recent attacks on oil tankers in the Middle East. Growing numbers of migrants at sea and an increase in stowaways on commercial vessels also has serious consequences for ship owners, leading to delays, diversions and pressure on crew. In contrast to Asia, piracy incidents increased in 2018 to more than 200 -- Nigeria is now the top global hotspot.


Other risk topics in the AGCS Safety And Shipping Review include:

  • The growing number of incidents on larger vessels is concerning. Container-carrying capacity has almost doubled over a decade and a worst case loss scenario could cost as much as US $4bn in future.
  • Trusting technology: Safety-enhancing technology in shipping has been a positive for safety and claims, yet accidents continue to happen due to overreliance -- even down to losses occurring from crew being on phones.
  • Autonomous shipping makes waves: Progress continues to be made but technology is not a panacea if the root cause of incidents and losses is not addressed.
  • Cyber threats increase and evolve -- With cyber losses set to become more prominent, companies are focusing more on cyber security assessments while some insurers are looking to clarify "silent" exposures. However, more contingency planning and stress testing of systems needs to be done to combat the growing number of loss scenarios, while new services could also help.


AGCS provides global marine and shipping insurance for all types of marine risk, from single vessels and shipments to the most complex fleets and multinational logistics businesses. The Marine Line of Business contributed 11% to AGCS overall premium volume of EUR  8.2bn in 2018. 



[1] Based on claims data from all vessels underwritten from AGCS Asia offices between 2015 and 2018. Claims have a total value of approximately $500mn, net of deductible (this represents the total cost to the insurance industry, not just AGCS, as more than one insurer can be involved on a particular risk)

[2] Based on analysis of 230,961 marine insurance industry claims featuring AGCS and other insurers between July 2013 and July 2018.




The issuer is solely responsible for the content of this announcement.
About Allianz Global Corporate & Specialty
About Allianz Global Corporate & Specialty

Allianz Global Corporate & Specialty (AGCS) is a leading global corporate insurance carrier and a key business unit of Allianz Group. We provide risk consultancy, Property-Casualty insurance solutions and alternative risk transfer for a wide spectrum of commercial, corporate and specialty risks across 12 dedicated lines of business.


Our customers are as diverse as business can be, ranging from Fortune Global 500 companies to small businesses, and private individuals. Among them are not only the world's largest consumer brands, tech companies and the global aviation and shipping industry, but also wineries, satellite operators or Hollywood film productions. They all look to AGCS for smart answers to their largest and most complex risks in a dynamic, multinational business environment and trust us to deliver an outstanding claims experience.


Worldwide, AGCS operates with its own teams in 34 countries and through the Allianz Group network and partners in over 200 countries and territories, employing over 4,400 people. As one of the largest Property-Casualty units of Allianz Group, we are backed by strong and stable financial ratings. In 2018, AGCS generated a total of €8.2 billion gross premium globally.


For more information please visit http://www.agcs.allianz.com/ or follow us on Twitter @AGCS_Insurance and LinkedIn.


Cautionary Note Regarding Forward-Looking Statements

The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, the words "may", "will", "should", "expects", "plans", "intends", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" and similar expressions identify forward-looking statements.


Actual results, performance or events may differ materially from those in such statements due to, without limitation, (i) general economic conditions, including in particular economic conditions in the Allianz Group's core business and core markets, (ii) performance of financial markets, including emerging markets, and including market volatility, liquidity and credit events (iii) the frequency and severity of insured loss events, including from natural catastrophes and including the development of loss expenses, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) the extent of credit defaults, (vii) interest rate levels, (viii) currency exchange rates including the Euro/U.S. Dollar exchange rate, (ix) changing levels of competition, (x) changes in laws and regulations, including monetary convergence and the European Monetary Union, (xi) changes in the policies of central banks and/or foreign governments, (xii) the impact of acquisitions, including related integration issues, (xiii) reorganization measures, and (xiv) general competitive factors, in each case on a local, regional, national and/or global basis. Many of these factors may be more likely to occur, or more pronounced, as a result of terrorist activities and their consequences.


The matters discussed herein may also be affected by risks and uncertainties described from time to time in Allianz SE's filings with the U.S. Securities and Exchange Commission. The company assumes no obligation to update any forward-looking statement.

SOURCE:

Allianz

CATEGORY:

Business

 
PUBLISHED ON:

04 Jun 2019

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