Shipping insurance costs may rise 5-6% next year

(LONDON) Insurance costs for shipping companies may rise between 5 and 6 per cent next year as underwriters prepare for stricter maritime safety regulations, said Aon Corp, the world's second-biggest insurance broker.

Underwriters will be 'looking for more money in expectation of a tighter regulatory environment' when providing protection and indemnity policies, which cover against 'third-party' risks such as oil spills, damage caused during collisions or crew injuries, Stephen Hawke, London-based executive director of Aon's Marine unit, said on Tuesday in an interview.

The UN and EU are implementing tougher guidelines on issues such as the discharge of waste oil into the sea and the treatment of injured sailors. The rules bind shipping companies such as Frontline Ltd, the world's biggest tanker operator by capacity, and Teekay Shipping Corp, the largest by sales.

'Previously, a vessel that sank in deep sea would be allowed to rot, but now they're required to be removed and that can be a complex operation' costing more than the loss of the vessel, Mr Hawke said. - Bloomberg