Insurers Poised to Bear Cargo Losses from Two Ship Mishaps Unforgettable

Two Key Incidents Along the Kerala Coast

Two Ship Mishaps

Recently, two significant maritime mishaps occurred off Kerala’s shoreline:

• The MSC ELSA 3 cargo vessel sunk near Thottappilly, prompting major salvage operations and ongoing claims coordination
• In another separate incident, cargo-containing ships faced mishaps in the same region—details are unfolding, but the losses are triggering multiple insurance claims

💰 Insurance Exposure: How Big is the Payout?

• Indian insurance companies underwrote approximately ₹5,535 crore in marine insurance premiums during FY 2025—with ₹3,940 crore alone in marine cargo insurance ground.news.
• Both mishaps fall under this coverage umbrella, meaning insurers may have to compensate cargo owners when claims are validated.

📋 Who Pays for What? The Insurance Breakdown

1. Cargo Insurance
   • Each container is typically insured separately.
   • Payouts cover actual cargo value, minus applicable deductibles
2. Hull & Machinery (H&M) Insurance
   • Covers physical damage to the ships themselves, including hull repairs or salvage in the MSC ELSA 3 sinking
3. Protection & Indemnity (P&I) Insurance
   • Managed by international P&I clubs, this covers broader liabilities, including:
     • Cleanup costs (e.g., oil or debris spills)
     • Third-party claims such as fishermen’s losses due to restricted fishing zones
     • Environmental damage (e.g., nurdle spills affect beaches)

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📌 Why Insurers May Be on the Hook

• With thousands of containers carrying consumer and industrial goods, confirmed losses represent substantial payouts under cargo policies.
• The MSC ELSA 3 incident, for example, resulted in halted fishing within 20 nautical miles and required oil extraction before salvage could proceed
• These disruptions lead to third-party claims, all falling under P&I coverage and adding to insurers’ potential liabilities.

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🔄 Handling the MSC ELSA 3 Case: A Focus on Claims, Not Charges

• Authorities have delayed criminal proceedings, focusing instead on evidence collection for insurance claims—including cargo, hull damage, and salvage costs
• A task force with nodal officers and a P&I “damage liability desk” in Kochi has been set up, coordinated by Captain Anish Joseph, to streamline claim processes

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📈 Industry-Wide Implications

• These incidents follow global patterns where major shipping mishaps lead to highly expensive insurance claims—such as the Baltimore bridge collision that cost insurers billions
• The rising frequency and scale of such events highlight growing risk exposure in maritime transport.

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✅ Final Takeaway

Insurers are preparing to settle large cargo claims stemming from the two recent Kerala ship mishaps. Coverage spans:

• Container contents—under cargo insurance
• Ship repairs and salvage—under hull & machinery insurance
• Environmental and third-party liabilities—under P&I insurance.

As coordination efforts intensify, particularly around MSC ELSA 3, P&I clubs and marine insurers will take the lead in assessing and paying valid claims—unless criminal proceedings take a different turn.

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