As the world continues to fight the COVID-19 pandemic, the economic consequences for economies around the world have already started to show their ugly face with mass unemployment on the rise, companies of all sizes filing for bankruptcy or requesting state aid. This is evident in the numbers recently published by the United Nations Conference on Trade and Development (UNCTAD): The coronavirus led to a 3% drop in global trade values in the first quarter of 2020. The downturn is expected to increase in the second quarter according to UNCTAD forecasts, which project a quarter-on-quarter decline of 27%. Such a drastic downturn will undoubtedly have an impact on marine insurers which directly rely on global trade. Defining the various ramifications of COVID-19 for our business is therefore at the top of most marine underwriters’ agenda. The shipping industry as the backbone of world trade is particularly affected due to the closely-knit web of international trade lanes which are connecting ports, people and cargoes.
In addition to the economic implications, a range of practical consequences with direct repercussions for insurance policies have emerged since the beginning of the crisis. These include, for instance, ships experiencing operational challenges such as shipyards or dry docks being closed and unavailable. Surveys, inspections and audits may not be carried out since surveyors are prevented to plan their visit due to travel restrictions or quarantines.
In response to this situation, the IMO has issued a number of circular letters which address the pandemic’s impact on shipping. In these circulars the organisation calls for a pragmatic and flexible approach between flag and port states with regard to regulatory requirements set out in IMO conventions. In addition to those safety concerns, the IMO also emphasises the necessity to keep seaborne trade flowing and exposed to as little interruption as possible.
Since the beginning of the outbreak many Flag states have published guidance with regard to certificates, ship surveys, audits, and inspections. The national measures often reflect a practical approach, for example through the extension of certificates. This is also true for various Port State Control authorities: Paris MOU, Tokyo MOU, Indian Ocean MOU and USCG have all issued guidance regarding the difficulties the shipping industry is facing during the COVID-19 pandemic. While acknowledging the need for protecting the health and safety of shore-side workers as well as seafarers, it is also critical to keep supply chains open. PSC authorities therefore recognise the need to provide for flexibility and clarity in this special situation.
IACS, too, issued a letter describing actions that have been taken by IACS and its members to help the shipping industry maintain continuity, particularly with regard to corona related restrictions on surveys and certifications. Classification societies such as ABS, Bureau Veritas, DNV GL, Indian Register of Shipping (IRClass) and Lloyd’s Register have all published guidance for shipowners on how to apply for extensions of statutory certificates or, where possible, remote surveys.
In order to keep our members informed, IUMI at an early stage launched a dedicated webpage related to COVID-19. In this section IUMI shares relevant information and resources about the impact of the pandemic on the global economy, the shipping industry and marine insurance. The news section is updated regularly to ensure on-the-spot information.
On 8 April 2020, IUMI further issued a guidance paper on COVID-19 for the marine insurance industry. The paper provides an overview of the impact of the COVID-19 virus on marine insurers and their clients’ business. Moreover, an IUMI webinar on the implications of the corona virus on the marine industry was held in April 2020. In this session Christopher Pålsson from Lloyd’s List Consulting provided an analysis on the impact on the global economy and the shipping market in particular. This was followed by an update from Matthew Wilmshurst, Senior Associate at HFW on potential implications and legal questions arising for marine insurers and the wider marine industry due to COVID-19. The webinar recording and the speakers’ slides can be found here.
Last but not least IUMI also decided to move its annual conference which was planned to take place in Stockholm to the digital space. It is the first time in more than 70 years that the annual gathering of marine underwriters from around the world will not take place in a physical format. This move to an alternative IUMI Stockholm Online Conference is yet another indication toward the many changes and implications the corona virus will bring not least to marine insurers.
 COVID-19 triggers marked decline in global trade, new data shows (https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2369)
 IMO: Coronavirus disease (COVID-19) Pandemic http://www.imo.org/en/MediaCentre/HotTopics/Pages/Coronavirus.aspx
 COVID-19 - Member States and Associate Members Communications http://www.imo.org/en/MediaCentre/HotTopics/Pages/COVID-19-Member-States-Communications.aspx
 Port State Control (PSC) guidance on Covid-19 https://iumi.com/news/covid-19-news/port-state-control-psc-guidance-on-covid-19
 IACS information and actions in response to COVID-19 https://iumi.com/news/covid-19-news/iacs-information-and-action-in-response-to-covid-19
 IUMI “COVID-19” Guidance Paper - Impact on the marine insurance industry https://iumi.com/news/covid-19-news/covid-19-guidance-paper--impact-on-the-marine-insurance-industry
 Covid-19: Implications for the maritime industry https://iumi.com/news/covid-19-news/iumi-webinar-covid-19-implications-for-the-maritime-industry