Avoid the Pitfalls: Risk Essentials for Real Estate Agents
More than half of Australian real estate professionals say client expectations have intensified in the past two years.
Ship fires often result from a combination of factors, with mis-declared or undeclared cargo frequently cited. Hazardous materials are occasionally shipped without proper classification, leaving crews unprepared to manage potential fires.
In the US for example, the National Cargo Bureau inspected 500 containers and found more than half (55%) missed the mark with declarations or storage requirements. Alarmingly, more than two thirds of important containers and about four in ten for export that had dangerous goods did not meet safety standards.
As previously noted, lithium-ion batteries remain a major concern, particularly as demand for electric vehicles and portable electronics continues to grow.
Challenges for the Marine Insurance Industry
The rising number of ship fires is putting added strain on the marine insurance industry. Insurers have reported a surge in claims and are adjusting their policies to address these evolving risks. One measure we’re seeing more often is limiting their coverage for lithium-ion battery-related incidents, due to the higher risks.
Insurers may use strategies, such as:
- Conducting detailed risk assessments of manufacturers and the quality of transported batteries
- Revising premiums to align with heightened risks, and
- Introducing exclusions for improperly declared or packaged goods.
As well, exclusions related to pollution or demurrage (fees for cargo remaining in a port or terminal beyond the agreed time) could also affect your coverage). Another concern is general average declarations, where all parties in a sea voyage share the costs of sacrifices or expenses incurred to save the vessel and cargo from a common peril.
Strategies to Reduce Ship Fire Risks
Global initiatives are being implemented to mitigate ship fire risks and boost safety. Positive steps include investments in advanced firefighting systems and enhanced crew training. For example, Lloyd’s Lithium Battery Consortium aims to improve safety standards for transporting these high-risk materials.
Another critical measure is improving cargo management, including accurate declarations and secure packaging. International agreements like the Tokyo Memorandum of Understanding encourage collaboration to tackle substandard shipping practices and promote safer seas. That MoU covers that Asia-Pacific region, which means Australia is also a signatory.
There’s a lot of ships out there – 60,000 in the global fleet – and this website tracks them.
Insurance Considerations for Your Business
If your business relies on maritime shipping, ensure your insurance coverage includes fire-related risks. Policies should explicitly offer protection for for liabilities regarding hazardous cargo, including lithium-ion batteries.
As your broker or adviser, we can help you closely review exclusions or limited coverage areas, such as pollution or general average claims, and more. We’re here to tailor policies to your specific business needs.
Article Supplied by OneAffiniti
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