General Insurance Article - Arctic conditions require care and attention says LMA


 Underwriters at the Lloyd's of London insurance market would not be surprised to see proposals for cruise ships transiting Arctic routes to travel in pairs, according to the Lloyd's Market Association.

 The reducing extent of the area permanently under ice is of great commercial interest and an increase in the number of vessels using Artic shipping routes will inevitably focus Lloyd’s underwriters’ minds on the safety issues.

 In particular, the market has concerns that the rate at which maritime traffic is increasing in Arctic waters is outstripping policymakers’ ability to create a legislative framework in the high north. The International Maritime Organisation is only making slow progress with its Polar Code and none on its 1974 instrument dealing with liabilities for oil pollution from exploration and exploitation of seabed mineral resources. In the meantime, industry has to improvise.

 A recent Royal United Services Institute conference, aptly titled Poles Apart, highlighted the growing interest in the region together with the differences between north and south. Attendees were also advised that Asian countries were very concerned by the threat of rising waters from ice-melt and classified it above defence as a strategic priority.

 Both polar areas are tourist attractions, but the south has seen more activity. In late 2007, over 150 passengers and crew had to be rescued after the sinking of the M/S Explorer, which was holed by ice near the South Shetland Islands. Fortunately for them, another cruise ship was relatively nearby and all were rescued from the open lifeboats within five hours. More recently, an international operation had to be mounted off northern Antarctica to rescue passengers from the ice-bound research vessel Akademik Shokalskiy.

 Opting to sail across the north of Russia can reduce the transit times for charters by over a week. 60 vessels were reported as using the trans-Arctic route in 2013, up from 46 in 2012 but this number was only a fraction of the 325 transit licenses granted. Of those 60 transits, 20 took place in October.

 However, the risks to shipping in Arctic waters remain extreme. Satellite navigation does not function properly and there is a lack of rescue infrastructure should a ship encounter problems. Accurate marine charts are almost impossible to obtain but despite the obvious hazards, the market frequently receives intelligence about vessels with inadequate ice-class operating around the fringes of the Arctic ice sheet.

 Insurers believe they can cover voyages in the high north but will need to be satisfied about the vessel's adequacy, and risk mitigation preparations. The Joint Hull's Navigating Limits Committee provides an information webpage about the ice areas as a support to underwriters in this specialised field.
  

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