Bangladesh Shipping Corp is demanding $22.4 million from its insurer for a cargo ship struck by a missile in March. This is the first big maritime insurance claim stemming from the Ukraine crisis.
Although shipping industry sources expect development to be gradual, the UN’s shipping agency announced last week that it will create a secure maritime corridor for commerce ships and workers detained in the Black Sea and Sea of Azov. In recent days, projectiles have hit four additional vessels, one of which has sunk.
Since the war began, insurance prices for voyages to the region have increased by more than 100 percent. Insurers are keeping a careful eye on the possibility of increased claims, which would drive up expenses even further.
On the night of March 2-3, an explosion rocked the Bangladesh-flagged Banglar Samriddhi, killing one of the crew members. The ship had been stranded at Olvia since February 24, when Ukraine shut down its ports in response to Russia’s incursion.
Ukraine accused Russia of firing a missile at the port facilities, while Russia’s embassy in Dhaka claimed the incident’s circumstances were still being investigated. Russia denies that civilians or commerce ships are being targeted.
After abandoning the ship, the vessel’s owner, BSC, has filed a claim with their insurer, according to a senior BSC official.
Sadharan Bima Corporation, based in Dhaka, provided the war risk protection, which was re-insured through Lloyd’s of London broker Tysers, according to a source at Sadharan Bima Corporation.
According to the source, Shadharan Bima’s exposure was 10%, with Tysers covering the remaining 90%.
“When it arrived at Olvia port, there was no cargo onboard,” the official claimed.
“Before sailing to Italy, the ship was intended to pick up ball clay from the port,” he explained, referring to a material used in the production of pottery.
Requests for comment from Tysers went unanswered.
Separately, BSC’s managing director, Commodore Suman Mahmud Sabbir, told Reuters that processing the claim would take time.
“The war risk insurer will be unable to send a surveyor to examine the extent of the damage unless the vessel is removed from the conflict zone. We are, without a doubt, taking all necessary steps to protect our interests “Sabbir remarked.
As the conflict escalates and the risks to merchant ships grow, London’s marine insurance market has expanded the area of high risk in the region.
“On paper, this appears to be a simple claim. However, given the current situation in Ukraine, this could take some time to complete, particularly if further (documents) is required “According to a source in the insurance industry.
According to media, the vessel was at anchor at the port with no staff on board, according to Viktor Vyshnov, deputy head of Ukraine’s Maritime Administration. The remaining 28 members of the crew were flown back to Bangladesh.
He explained, “The captain of the port is seeking for some crew to come on board.”
The ship’s bridge was damaged when the missile hit, but it was unclear whether the engine was destroyed, according to Vyshnov.
P&I insurance is common on ships, and it covers third-party liability claims such as environmental damage and injury. Physical damage is covered by separate hull and machinery policies. This is in addition to the coverage for war risks.
The vessel was entered with Skuld for P&I, according to Stale Hansen, president and chief executive of Norwegian ship insurer Skuld, who added that “given the war condition of this fatality, this loss is being handled by war underwriters.”
In July of last year, the Liberian-flagged, Japanese-owned oil products tanker Mercer Street was destroyed by a suspected drone strike off the coast of Oman, killing two crew members.
According to data study by insurer Allianz Global Corporate & Specialty, less than 10 ships of bigger than 100 gross tonnes were total losses in attacks between 1980 and 2020.