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Insurers say they lack experience pricing insurance risk in Arctic shipping

THE absence of accidents along the Northern Sea Route above Russia and the Northwest Passage above Canada and Alaska make it hard for insurers to price risk as they do on other trade lanes, according to a new report.

Insurers say they lack experience pricing insurance risk in Arctic shipping
26 August 2014 - 21:06

Insurers say they lack experience pricing insurance risk in Arctic shipping

THE absence of accidents along the Northern Sea Route above Russia and the Northwest Passage above Canada and Alaska make it hard for insurers to price risk as they do on other trade lanes, according to a new report.

"In the absence of hard facts, it is extremely difficult for marine insurers to price an insurable risk, or even to agree to cover a voyage in the first place,?said Marcus Baker, chairman of Marsh’s Global Marine Practice.

The report, "Arctic Shipping: Navigating the Risks and Opportunities" by the Marsh McLennan group, said rapid development of fledgling Arctic shipping is dependent upon several factors.

These include improvements in vessels navigating Arctic waters as well as the upgrade of support facilities in the region, reported London's Tanker Operator, adding that most transits are one-off extraordinary ventures and often government backed. 

Said Marsh vice president Steve Harris: “Only if shipping firms can present insurers with information they require, can all take a collaborative approach to calculating risk to support the growth in Arctic navigation.¡¨ 

Most ships and crews lack experience and the region is lacks support facilities for a full-scale commercial voyages, the report said. 

The report also said shipping companies need a fuller understanding of the risks involved to gain the confidence of insurers, and warned of the inadequacies of ships sailing in Arctic waters, especially in the oil and gas sector. 

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