Scandinavian Green Recycling Initiatives

During the winter Edge has had discussions with several Scandinavian marine insurers on the subject of how wreck removal cover responds to green recycling requirements. Specifically we have addressed the issue of an EU flagged vessel suffering hull damage which in turn triggers a constructive total loss under the H&M policy, in a remote location on the South American West Coast, in other words very far from an EU approved recycling yard. Does the policy cover the considerable additional expenses that follow from towing or removing the hull over these distances? And furthermore, if the vessel is not an EU flag, how does the individual P&I Club propose that recycling is carried out, and to what degree will the additional cost of recycling at an EU yard be covered if the vessel’s flag state has NOT ratified the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships?

These discussions have recently triggered two notable initiatives from leading Scandinavian marine insurers.

Norwegian Hull Club

With interaction with Edge’s Special Risk resources the NHC has launched a “Sustainable Recycling Insurance” (SRI) that picks up these expenses should P&I not accept that the vessel needs to be recycled in the EU. The NHC have also provided environmentally focused shipowners flying say the Liberian flag with an insurance solution that funds EU green recycling at an affordable cost, on the condition there has been a total loss under the H&M insurance. The SRI insurance is shown at https://www.norclub.com/insights/sustainable-recycling-interest-new-cover-supports-clients-facing-total-loss-sustainability-challengesand at  https://edgegroup.com/portfolio/ – please contact us for further background on cover wording and pricing.

Gard

As the discussions were taking place Edge noted positive intents where Gard expressed the view that the club would cover EU recycling costs. However, we could not immediately see that this obligation was reflected in the P&I Rules. With Gard’s Update on 25 March, the Club it has made it resoundingly clear that it sees this as covered under the existing P&I rules: “This means that for EU-flagged vessels, we will cover the extra cost and travel necessary to make sure the vessel is recycled in line with EU regulations” says Andreas Brachel Gard’s Head of Environmental Claims. But Gard goes further and says “When dealing with vessels which are flagged outside of EU, Gard will make sure – as far as practically possible – that recycling is undertaken by a yard complying with the Hong Kong Convention as a minimum requirement.” So whilst not the cast-iron guarantee provided by the NHC’s insurance product, the “as far as possible” caveat should respond in most cases. With this stance we would expect Gard not to cover in only the most extreme of cases and where additionally it could be argued that moving the ship would represent environmental exposures of its own.

Gard’s article on the subject which also contains case examples can be read at https://www.gard.no/web/news/article?p_document_id=31417346

Consequences

We expect other clubs to make similar statements of those of Gard, and that this in turn will become the industry norm, with or without changes to the IGA Rules

If you have an interest in learning more of Edge’s Sustainability goals and activities please follow this link https://edgegroup.com/sustainability/