Autonomous ships carry unknown risks, opportunity for insurersMay 2, 2017 02:33 PM
Just a dream a decade ago, autonomous ships are moving closer to reality. Hronn, billed as the world’s first fully automated offshore supply vessel, is scheduled to be launched in 2018.
Advances in the development of autonomous vessels are leading marine insurers into uncharted waters with new risks for the sector but also potential benefits compared to insuring crewed vessels.
Capt. Andrew Kinsey, senior marine risk consultant at Allianz Global Corporate & Specialty, said autonomous operation presents a tremendous number of unknowns regarding risk, but he pointed out that the maritime industry has experience in this area.
“The issue of autonomous vessel operation has been dealt with before on board ships, when we first started with unattended engine room operations,” he said. “In that case, the vessels were operated in a manned state and engine room alarms were logged and analyzed.”
Kinsey believes that fully autonomous vessels will face the same scrutiny.
“This is not going to be a case where one day we just flip a switch and take the crews off,” he said. “I believe the bigger question is, how can we bring this technology on board current vessels and make them safer to operate while manned?”
Kinsey is forthright, stating, “This should not be a race to cut costs, but to instead make vessel operations safer and therefore save money.”
Alan Jervis, a chartered insurer at Alan Jervis Resources International, said autonomous vessel technology could provide advantages, the most obvious concerning personnel.
“A potentially very large positive from an insurance/risk management perspective is that the risks inherent in having a crew will be significantly reduced or virtually eliminated,” he said. “Hence, insurers will be less concerned with claims rising from injury and/or loss of life at sea. Crew who were formerly charged to run a vessel at sea will eventually be able to operate the vessel from a safe remote location on land.”
Jervis said the key will be proper management of the technology to handle all events, foreseen and unforeseen, including engine or mechanical breakdown on the open seas, extreme heavy weather, piracy and pollution. “Regulatory controls, however, will be in place,” he said.
Needless to say, cost will play its part, with comparisons to conventional vessels emerging in many forms. For example, Jervis differentiates between insurance on the hulls of autonomous vessels and protection and indemnity (P&I) insurance.
“Regarding unmanned vessel hulls, these will be new initially and, because of sophisticated technology, will result in higher values, in turn creating a challenge for insurers to produce sufficient capacity to insure such high values,” he said. “P&I, covering the liability of the vessel, means that crew claims for loss of life or personal injury will be substantially reduced if not almost entirely eliminated.”
Kinsey said autonomous vessels will have numerous costs that conventional vessels don’t have.
“There will be the onboard infrastructure as well as the shoreside infrastructure; all of these costs will have to be evaluated so that operators can make an educated decision whether the cost savings are viable,” he said. “Regarding insurance costs, in many ways it will be the same as conventional vessels — rates being based on the risks that are present. Given the lack of hard data available at this point in time, any discussion of rates would be purely hypothetical.”
One of the biggest challenges for insurers will be assessing the risk of an environmental disaster when autonomous vessels take to the sea. Without a crew, a disaster-containment response team may be hundreds of miles away.
“This is definitely a concern,” Jervis said. “Under the current system, in the event of a maritime disaster, a crew may be able to respond quickly and effectively to prevent or mitigate a loss (for example, put out a fire). In effect, with the eventual introduction of unmanned vessels, there has to be technology present to do the same thing. … Yet the flip side to this is that with automation, human error is also reduced. So if the technology is sound, there is an argument that the chances of a man-made disaster are significantly reduced.”
Kinsey said if any vessel, autonomous or conventional, has a serious engineering casualty and a subsequent environmental incident, it is a tragedy.
“One of the key aspects of my job is to attempt to get in front of the loss and break the chain of events,” he said. “Accidents are preventable and it is of utmost importance that we remember that fact and use all available means to achieve that.”
Jervis said that although autonomous technology already exists, it needs testing and re-testing on the high seas as well as regulatory approval. Kinsey did not supply a timetable for when the concept might be viable, believing that the changes will be made only when it makes economic sense to operators. In this respect, the need for significant changes in engineering points to newbuilds determining the course.
One of the most ambitious timelines involves an effort by Automated Ships Ltd. and Kongsberg Maritime. The partners announced plans last year to build Hronn, the first unmanned and fully automated offshore supply vessel, and have it on the water in 2018.