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2021 IN REVIEW | Polar risks In association with LMA
Risk up North Neil Roberts, Head of Marine and Aviation at the Lloyd’s Market Association (LMA), explains the key risk management and reputational considerations that insurers need to be aware of when writing business in the Polar regions The Arctic is self-evidently a challenging environment. So much so that insurers consider it to be at the frontier of risk. Polar risks are only written on a special acceptance basis as, quite literally, they are off the insurance coverage map.
POLAR PROBLEMS For any voyages in the High North or indeed in Antarctica, insurers will seek to establish that prospective clients are acting with professionalism, the voyage is carefully planned, the ship and crew are adequately equipped and that all reasonable loss mitigation measures have been taken. The concerns include floating and static ice, shifting ice channels, and crew being exposed to a hostile and unpredictable environment in restricted visibility, with fog and/or darkness up to 90% of the time. Weather reports are often inadequate and violent storms can occur at any time. The extreme cold can cause engine problems, affect equipment and there is reduced coverage for navigational aids such as GPS which is serious when charts are frequently inaccurate and the earth’s magnetic field disrupts compasses. A sharp look-out is needed. Disintegrating icebergs can spawn bergy bits and growlers that may not show up on the radar, very concerning when salvage facilities remain almost non-existent. Tugs are expensive and a relatively minor incident in these remote regions can easily escalate into a life-threatening problem and a very large claim. With all these factors at play, insurers must be cautious
The Marine Insurer | January 2022
when they accept risks and will ask questions to give themselves comfort that any given voyage will be conducted with sufficient attention to safety. This is simply common sense.
MITIGATION On the plus side, the comparative information vacuum of 10 years ago has been much improved by the Arctic Council’s web-based PAME Portal designed to help with the effective implementation of the International Maritime Organization’s International Code for Ships Operating in Polar Waters (Polar Code). This is a very significant resource based on truly international co-operation. There is more guidance on the necessary vessel preparation than there was. The Polar Code requires operators to carry a Polar Waters Operational Manual to demonstrate that they have catered for a worst-case scenario in the planned voyage or operations that the ship is intended for. The insurance market added the POLARIS evaluation grid to provide a standard approach for assessing risks to the ship in the ice conditions expected. Things have therefore improved in terms of a risk management tool-kit, but insurers still need to ensure that the shipowners are undertaking their due diligence depending on the specifics of the voyage.
TRANSITION FROM CARBON The UN ban on heavy fuel oil in the Arctic attracted attention and some criticism but demonstrated a heightened awareness around the problems related to Arctic pollution whether caused by the obvious and visible oil or the less obvious grey water and micro plastics.
“The UN ban on heavy fuel oil in the Arctic attracted attention and some criticism but demonstrated a heightened awareness around the problems related to Arctic pollution whether caused by the obvious and visible oil or the less obvious grey water and micro plastics.’’ Neil Roberts, Lloyd’s Market Association
