Marine Insurance

The melting of sea ice presents opportunities for international marine transportation networks in the Arctic. Recent discoveries of oil and the potential financial and time savings are making the Arctic shipping routes more appealing to the shipping industry. Two viable Arctic sea routes exist, enabling ships to move between the Atlantic and Pacific Oceans, thus cutting the distance between East Asia and Western Europe. But with more frequent trade in a dangerous climate these new Artic shipping routes cause concerns for marine insurers.

These new routes offer viable alternatives, but they are not without risk. Extreme climate and weather conditions create unique hazards, including floating ice, thick fog, and violent storms. Despite new safety features, vessels remain vulnerable to ice damage, machinery breakdown, and more. The harsh environment also creates challenges for crews, few of which have been trained for or have experience in such conditions, according to insurance broker and risk adviser Marsh.

The international shipping industry is keen to start maximizing the opportunities afforded by Arctic navigation. Yet the marine insurance industry — essential to the commercial viability of Arctic transit — holds a host of safety and navigational concerns, which may limit and/or prohibit the possibility of rapid growth in Arctic transit for the foreseeable future.

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