Transit to greener fuels will need risk management – IUMI

Marine insurers have urged maritime regulators to take a pragmatic approach to the move to greener fuels.

Speaking at the IUMI (International Union of Marine Insurance) annual conference being held remotely from Seoul, Helle Hammer, (above) chair of IUMI’s Policy Forum said that the move to a low carbon future came with risks that needed to be recognised and addressed.

While IUMI has expressed its full support for the shipping industry’s move to decarbonisation it said there was a recognition amongst its members that adequate risk management provision must be in place to underpin the transition. With new fuel types such as ammonia and hydrogen are being promoted Hammer warned their use will need to be properly managed and insured – and this requires regulation.

“We applaud IMO’s ambition and calls for a decarbonised shipping industry,” she explained. “As marine insurers, it is our job to help shipowners transition to low or zero carbon fuels safely and with all associated risks fully understood and managed. As these new fuel types are largely un-tested, the insurance industry has no history or loss records to help it assess the potential risks involved.”

“We need to learn about these new fuels and educate our clients accordingly,” explained Hammer. “As importantly, we need IMO regulation and Class rules on the implementation and use of these new fuels. This will ensure the safety of the crew and enable marine underwriters to assess and offer necessary financial protection for this new risk profile. Mindful of the time it takes for new regulation to come into force, we urge IMO and other regulators to begin work now”.

Two recent submissions to the IMO have proposed the development of safety guidelines for new fuel types and European Union Member States and the European Commission propose to include this in the work plan for the next phase of the development of the International Code of Safety for Ships using Gases of other low-flashpoint Fuels (IGF Code).

As a new output under the Maritime Safety Committee, Japan, Singapore, International Chamber of Shipping (ICS) and INTERCARGO have proposed to develop guidelines for safety of newly built vessels using ammonia as fuel. IUMI believes that guidance is also needed for the education and training of crew onboard, and to address safe and environmentally sound operations.

Hammer continued: “Environmentally friendly fuels carry their own risks, ammonia is both toxic and corrosive, and hydrogen has a wide flammability range and ignites easily. Whilst we welcome the proposed safety guidelines as a useful starting point, they are non-mandatory and so can only be an interim measure. We urgently need mandatory requirements to be developed and implemented to facilitate the transition to greener fuels.”

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