Ever Given owner facing more than $3bn in liability claims
The recently re-floated Ever Given could well exceed its liability insurance limits - with claims likely to exceed the $3bn of cover already in place.
The vessel’s liability insurance is part of a traditional arrangement with the International Group of P&I Clubs which give liability coverage for an estimated 90% of the world’s at-sea shipping operations.
Considering costs per day to the shipping and business community globally have been estimated as exceeding $9bn for every day delays have continued, additional claims for massive losses are fully expected.
Losses are likely to be claimed by more than 200 ships that were delayed in the canal as a result of the week-long crisis. This is on top to the claims that will need to be settled by the cargo owners.
In a recent statement, the U.K. P&I Club that insured the owner of Ever Given for certain claims, said that the vessel itself, along with the cargo, are insured separately. “While the UK Club is unable to comment on any confidential insurance or potential claim details, all valid claims will be considered by the vessel owner, the UK Club and its legal advisers in due course. Currently, the UK Club’s focus is to work with all relevant parties to facilitate a safe conclusion to this incident.”
Industry executives also said that plaintiffs’ attorneys for other ships and their cargo are expected to seek coverage wherever possible.
According to recent reports, cargo issues look set to increase the claims significantly because they result in delayed manufacturing, loss of retailer stock, spoiled goods that have a limited shelf life and spring merchandise not reaching stores in time.
Future cargo trips are also impacted as delayed ships miss their deadlines for unloading, reloading and embarking on their next voyage. Indeed, some ships may even end up filing claims with both Ever Given’s insurance and their own insurers as well as Shoei Kisen Kaisha LTD - the stricken ship’s owners.
Reports suggest that most of the insured cargos that are delayed, consist of commodities, including steel, coal, grains and rice which were held up on their journey from South East Asia. The crisis has caused additional suffering to businesses already badly hurt from the COVID-19 pandemic.
Further claims could also be made through policies taken out by cargo owners and other ship owners, as under industry practice, cargo owners can purchase their own coverage to protect their interests rather than relying on the ship owner to provide it.
As it stands, a standard cargo policy only pays out for damage or loss of goods, not delay costs, and a large number of cargo owners don’t provide their own insurances to cover delays.
Ever Given policies
Current reports suggest that there is $3.1bn in liability in place for the Ever Given. This is a pooling arrangement spread across 13 P&I Clubs which cover claims of up to $100m.
Above and beyond that reinsurance becomes active, and an additional $1bn covers environmental crises such as oil and pollution accidents. An estimated 20 of the 25 biggest global reinsurer companies support the Ever Given coverage.
According to John Miklus, president of the American Institute of Marine Underwriters, a trade association of U.S. marine insurers, “There will be a lot of litigation.”
He said, “I can’t predict how successful they would be, but it isn’t much different from many liability situations: You try to recover from the party that is at fault, the party that caused the incident.”
TrueMotion insurtech acquired by Cambridge Mobile Telematics
One of the world’s leading telematics insurtechs, Cambridge Mobile Telematics, was launched in 2010 and powers 65 enterprise programmes in 28 countries.
Meanwhile, TrueMotion, which launched in 2012, has enjoyed significant success as a telematics operator, raising US$10mn in its seed funding round in 2010, and then partnering with the motor insurtech Noblr in 2019.
TrueMotion has also entered the European market, collaborating with LB Forsikring to promote safe driving in Denmark.
The joining of the companies means TrueMotion’s 150-strong workforce will join Cambridge Mobile Telematic’s already established team, along with their client list, which includes Travelers, Farmers, and Progressive.
The new company will focus on increased interest in using telematics for crash reconstruction in personal lines claims and more innovation in the telematics space.
Speaking about the acquisition, William Powers, CEO, and co-founder of Cambridge Mobile Telematics, described the move as an opportunity to explore new markets, expand throughout the US and bring telematics to a much wider customer base.
"With this acquisition, we will use our world-class talent, technology, and scale to help our partners overcome the complex challenges of global road safety,” he added.
Ryan McMahon, VP of insurance and customer affairs for Cambridge Mobile Telematics, explained that expanding the company with additional talent and customers would help meet the demands of a growing telematics market. He also quoted data from a study by J.D. Power which revealed that personal auto telematics users have doubled in five years to 16% of policyholders.
McMahon told the press, “This market is rapidly expanding, and building more capabilities is more important than ever,” McMahon says. “Both companies follow similar philosophies and grew up in similar ecosystems, and now we’re bringing those cultures together.”
He continued, “Telematics is absolutely the future of commercial auto and rideshare, and it’s kind of a step up beyond the normal telematics."
McMahon added, “We will not only widen our lead in smartphone telematics, but also use our combined talent to invent new products for risk measurement, contextual telematics, and crash mitigation across emerging mobile, IoT, connected-car, video, and sensing technologies.”
Five reasons why telematics is in demand
- It reduces fuel costs and increases operational efficiency. This is a consideration for most commercial fleets given the rising costs of fuel
- The technology enables fleet managers to plan operations with greater precision by providing exact locations, timescales, and speeds of vehicles.
- It improves driving standards and monitors driver behaviour, reducing detours and ensuring responsible driving.
- It helps fleet health and maintenance by monitoring the health of operational vehicles.
- It increases corporate social responsibility in terms of care for the driver, the vehicle, the impact of driving in terms of emissions, and also the security of the vehicle itself.
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