Shipping insurance premia could rise from Sri Lanka Express Pearl judgement : Report
A billion dollar fine imposed by a Sri Lanka court over chemical and plastic spill from Express Pearl, a container ship that caught fire could, result in higher insurance and make some regions dependent on ‘shadow fleets’ with no cover, a media report said.
The Sri Lanka judgement was “alarming”, London based Financial Times newspaper quoted James Bean, chief executive of the London P&I Club, which insured the X-Press Pearl.
The vessel caught fire in Colombo after a corrosive chemical leached from a container.
Though a chemical leak was discovered early, the distressed vessel was not allowed into harbours on the way to offload the container, until it reached Colombo, when the vessel caught fire.
Sri Lanka is not a party to conventions that limit shipowners’ liability, which could result in higher insurance premiums on ships and cargoes, the FT report said.
In any case current conventions do not cover plastic pellet spills, which was a key fallout of the Express Pearl case.
A rise in the cost of cover could leave some regions more reliant on a “shadow fleet” of vessels without western insurance, the report quoted Bean as saying.
Such vessels will have no insurance at all, he claimed.
The FT report quoted Hemantha Withanage, chair of Sri Lanka’s Center for Environmental Justice, as saying that the Exxon Valdez and Deepwater Horizon oil spills in US waters, which both led to fines of more than a billion dollars.
“When they come here, they calculate less, because we’re less wealthy, or maybe because we don’t have the bargaining power,” the report quoted Withanage as saying.
He said shipowners should work on improving safe carriage of chemical cargo instead of engaging in unsafe practices and then forcing cargo insurance premiums up.
Other analysts say international maritime organizations, and shipping lines ports should come up with procedures to help ships distressed with chemical spills to go to the nearest port to offload cargo early, before allowing leaks to go on for days on end, until they leach to other cargo which then catch fire.
Instead of raising premiums, insurers should work to reduce the risk of chemical leaches going on for extended periods because ports refuse to help distressed ships facing chemical fires.
RELATED : How the X-Press Pearl disaster could have been avoided
According to reports the vessel had been refused entry by Port Hamad, Qatar, and Hazira, India.
